As part of its strategy to revive the domestic steel industry, the National Democratic Alliance government has constituted a high-level committee of secretaries on steel to suggest measures needed for the sector’s growth.
The steel sector is under stress globally due to a structural demand slowdown in large consumer countries and significant overcapacity in China. Tata Steel Ltd has put up its UK operations for sale and the British government is desperately seeking buyers for the business. Indian steel manufacturers are also facing challenges as cheap imports have lowered demand for domestic produce.
According to two government officials, who requested anonymity, the committee will include secretaries from ministry of steel, commerce, financial services, coal, power and mines. The committee will also have the chairman of the Railway Board and state-run Steel Authority of India Ltd (SAIL) as its members.
Indian Railways is one of the largest consumers of steel in the country. The government believes that more domestic demand can come up from Indian Railways as it is on an expansion spree with new railway lines, which require steel.
“The committee will also look into other infrastructure sectors as well in order to push the growth process,†said the one of the government officials quoted above.
The Bharatiya Janata Party-led government is projecting a gross domestic product growth of 7-7.75 per cent for the current financial year and is extending help to steel firms to survive in the current scenario. The government on 29 March extended the provisional safeguard duty on steel till March 2018, and the steel ministry has tasked consultancy firm KPMG India and investment bank SBI Capital Markets Ltd to assist in working out a bailout package.
Queries emailed to the spokespersons of the ministries of steel, mines, coal, power, finance, commerce and railway, and SAIL on 5 April remained unanswered.
“The steel sector is currently undergoing stress. The committee will give recommendations to the government on the necessary policy initiatives which the steel sector needs at this time,†said the second government official.
China has improved its steel production capacity and registered a production of 803.8 million tonnes (MT) for financial year 2014-15. India’s consumption of finished steel was 77 million MT for financial year 2014-15. Of this, imports accounted for9.32 MT, a jump of 71% over the previous fiscal. Import of finished steel has further gone up to 10.216 MT till February this financial year compared with 9.32 MT in FY2014-15.
Analysts believe that given the stress in the steel sector, a concerted strategy is the need of the hour.
“All big steel companies have reported losses over the past few quarters and it is imperative that something is done to address the situation,†said Bijoy Thomas, analyst at India Ratings and Research Pvt. Ltd.
Note: The story has been republished with corrected information.