Despite the recent crisis that the domestic steel industry is fast recovering from, its long-term potential is huge and it is more than feasible its capacity would increase dramatically from 120 million tonnes (mt) at present to 300 mt by 2030-31, steel...
Despite the recent crisis that the domestic steel industry is fast recovering from, its long-term potential is huge and it is more than feasible its capacity would increase dramatically from 120 million tonnes (mt) at present to 300 mt by 2030-31, steel minister Birender Singh said on Wednesday. Speaking at the Indian Express Group’s Idea Exchange programme, he said that banks, which are “flush with funds”, have now become favourably disposed to giving fresh loans to the steel industry.
Hit by cheap imports, reduced pricing power and tepid demand growth, domestic steelmakers had a share of more than a quarter of the banks’ stressed assets in 2015.
“Our banks are sitting on deposits of over Rs 15 lakh crore and are paying 4% interest on savings accounts. So it is natural that most of them are now looking for (borrowers),” the minister added.
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According to Singh, protective steps taken by the government — like the minimum import price (which existed on a clutch of products until last month) and anti-dumping duties (which as many as 120 products are currently subjected to) — were not of a permanent nature, adding that the industry would not need such hand-holding for long.
He said that “due attention” would be paid to the secondary steel sector which produces steel at much cheaper costs than the primary steelmakers. Secondary steel producers, who also make steel and add value to both domestic and imported steel, account for over 55% of the steel produced in the country at present. “The contribution of secondary producers will grow faster in the coming years,” the minister said. However, analysts said that secondary steel-making is more reliant on imports.
Steel imports dipped 37.8% during April-January of the current fiscal year to 6 mt. During this period, export of steel products was up by a whopping 71% to 5.86 mt, providing the industry much-required relief and helping firms repay loans. Although investments are still to pick up in the economy, steel consumption is expected to rise soon, helped by government funding of infrastructure projects and the incentives being given to the affordable housing sector.
India, the world’s third largest producer and consumer of steel, produced 89.32 mt of the alloy last fiscal, clocking just 0.4% growth over the previous fiscal. The industry had, for the last two years, been passing through one of its worst phases in many years.