The government has recently cleared a new steel policy that envisages 300 MT installed caapcity by 2030-31 from around 126 MT now. Steel secretary Aruna Sharma speaks to Surya Sarathi Ray detailing the plans to achieve the target. Excerpts:
The new steel policy targets 300 MT manufacturing capacity by 2030-31. How do you plan to achieve the target?
Today, our capacity has already reached 126 MT. Another 24 MT is under process. Hopefully, we will be able to reach 150 MT by 2020. We have to do the remaining 150 MT in the next 10 years. All of them won’t be through the greenfield route. Techno-economic parameters of Indian steel firms are very low, harnessing which we can easily add around 25-30 MT capacity. We also want to use scrap for steelmaking, which will need lesser amount of investment. Third will be value-addition plants where value adition will be done on basic steel.
Foreign players would also be more intersted now on making investment in India as our new procurement policy lays preference on steel made in India. So anybody who is looking for a market, where the basic buyer is either the centre or the state governments or its agencies, I think it makes a lot of logical busienss sense for them to establish plants in India. They will also bring in additional capacity.
With all these, fresh capacity to the tune of 70-80 MT may be required to set up and that will not require `10 lakh crore fresh investment. It will be much less.
Has any foreign steel company evinced interest so far?
We do have Posco in India which makes auto steel imporing HR Coil. We also have Thyssenkrupp which imports CR Coil and make CRGO steel here. Then there are a lot of talks on joint ventures are going on with both public and private sector firms. Arcelormittal and Hyundai are interested.
Is Indian conglomertate willing to invest in the steel sector?
With the enhancement of the domestic market and with the kind of trageted intervention, Indian comapneis may come forward. Steel policy has reduced the ambiguity as much as possible. Vedanta may come, but there are no concerete talks. Setting up an integrated steel plant requires a huge money. I expect Indian firms to come inot the seconadry steel sector.
There is excess capacity around the world – in China, Japan and others. Landed cost of HRC is also cheaper than the domestic price today. Why should people will invest afresh?
All counties are interested in India because of its market. There are no major economy which is growing faster than us. We are on a 7% growth rate. So, with this kind of growth rate, India is an interesting place for investment. Indian companies will have to decide whther they want to buy imported steel or steel made in India. Steel making is a must for every country to grow, because it is a major contributor to the GDP. If you don’t do that, you will just be a consumer. Making more steel into India will also ensure generation of employment. From consumers’ point of view also, quality steel will be available at a competitive price.
How would you ensure raw material for such huge quantity of steel?
Iron making in future will not be entirely based on iron ore. It will be a combination of scrap, pellet and iron ore. The first two routes will be occupying 40-50% of steel making. With this, iron ore qequirement will be stabilised.
Will there be any price cap on iron ore?
No, we are not talking of a cap at all. What we are telling is that the cost of inputs has to be competitiove and affordable. For iron ore, it is being worked out. A committee is working upon it. We are waiting for their final report. Input pricing can’t be directly proportional to the output pricing. Output pricing is directly controlled by the market. We feel that somebody can’t be more winner at the cost of another. There is no denying the fact that miners should also have a good profit. We have to make mining a profitable thing, but there has to be a complete logic in the pricing polciy. As far as it works within the logic, there is no problem. But, the moment any one of them, including steel makers become exploitative, it would require to go into hair-combing and finding out why this is happening.
Are you mulling setting up a regulator for the steel sector?
At this point, there is no thought on this. We are now into diagonistic stage and after that, we will come to the prescription stage. Let the disgonistic thing happen. Wait.