A meeting called by the steel ministry to resolve issues regarding the proposed $1-billion SAIL-ArcelorMittal joint venture to produce lucrative automotive steel in India was postponed on Friday.
A meeting called by the steel ministry to resolve issues regarding the proposed $1-billion SAIL-ArcelorMittal joint venture to produce lucrative automotive steel in India was postponed on Friday. The steel ministry has been pushing the two parties to iron out their differences for sometime now. Steel minister Birender Singh has earlier asked them to seal the deal by December last year. Failed, the minister has now given the home-grown steel major time till May to make it happen or back off. This comes following Prime Minister’s Office seeking for a status report from the steel ministry as India-born billionaire Lakshmi Mittal sought Prime Minister Narendra Modi’s intervention for an early formation of the alliance.
“The meeting between the two in the presence of steel secretary has been postponed as SAIL chairman P K Singh is out of station,” said a source. The two companies had signed a memorandum of understanding (MoU) in May 2015 for setting up the 50:50 JV to cater to the fast-growing automotive sector of India, poised to become the the world’s fourth largest automobile manufacturing nation by 2020.
Increasing the availability of indigenously produced automotive steel would reduce India’s dependence on imports and is likely to give the automotive industry a sustainable competitive advantage. As per the MoU, SAIL was supposed to supply steel to the joint venture entity while the ArcelorMittal will provide the required technology. ArcelorMittal caters to around 17% of the global auto steel demand. The JV with SAIL may also act as catalyst for other foreign steel firms to invest in India, which aspires to create 300 MT production capacity by 2030-31 from around 120 MT now.