Greenfield route: Govt wants states, PSUs to help boost steel capacity

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Published: December 26, 2019 1:54 AM

The steel ministry is of the view that the setting up of large greenfield steel plants would drive large investments which, in turn, would boost GDP and generate employment.

Every tonne of steel produced typically leads to an impact of approximately Rs 25,000 on GDP and every 4-5 MTPA steel plant creates over 25,000 direct and indirect jobs, it said.

The steel ministry wants state-run units under its supervision, such as SAIL and RINL, and state governments to come up with various enablers such as encroachment-free land and steady supply of raw material to help the industry build 25-30 million tonne (MT) additional steel production capacity through the greenfield route by 2024-25.

An estimated Rs 1-1.5 lakh crore investment would be required to create the targeted capacity. India’s current steel capacity of 142 MT is being augmented by 28-30 MT through the brownfield route by 2024-25.

The ministry envisages it would be imperative to create additional capacity through the greenfield route to meet the projected 160 MT consumption target by 2024-25. Consumption usually lags capacity. India consumed 99 MT steel in 2018-19.

The steel ministry will do its bit, including facilitating single-window clearance for forest and environment, liaise with different agencies for iron ore linkages, etc to help the industry in creating the additional capacity. But it wants two potential routes, driven by steel CPSEs and state governments to operationalise the plan.

“Excess land available with steel CPSEs may be leveraged by steel CPSEs as per approval of their boards. Additionally, supply of iron ore from mines available with the steel CPSEs at an arm’s length may be evaluated for the project,” the steel ministry said in its draft policy for promotion of greenfield investments in the steel sector.

The steel ministry proposed three models for the states to follow for enabling the industry to set up greenfield units with capacity of over 4 MT each. The first option is for states is to identify a suitable land parcel and a mine for end-use and auction the combine to the end-users through a fair and transparent process. Secondly, the combined auctioning of an identified land by the states and a guaranteed long-term raw material linkage from state-owned PSUs and lastly, jointly auctioning of land parcel and a minority 26% share transfer for the end-user for setting up the greenfield facility.

States have also been advised to support the facilitation of clearances from state pollution control boards; logistic and utility linkages for the project. States could also explore provision of potential incentives like SGST rebate for a fixed period of time, capped at capex value of the investments, to promote mega investments in the state.

The steel ministry is of the view that the setting up of large greenfield steel plants would drive large investments which, in turn, would boost GDP and generate employment.

Every tonne of steel produced typically leads to an impact of approximately Rs 25,000 on GDP and every 4-5 MTPA steel plant creates over 25,000 direct and indirect jobs, it said.

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