Cabinet clears National Steel Policy favouring Indian steelmakers
The Union Cabinet on Wednesday approved a new steel policy that envisions investment of Rs 10 lakh crore to build more production capacity .
The policy has planned for a steel demand of about 230 million tonne by 2030-31. It mandates to “give preference to domestically manufactured iron & steel products (DMI&SP) and will be applicable on all government tenders where price bid is yet to be opened,” said a statement issued late on Wednesday.
“All government tenders will give preference to domestically manufactured iron and steel products. There will be a condition in it (tender) so that the surplus capacity is consumed,” said finance minister Arun Jaitley.
Indian steel makers who import raw materials or intermediate products can claim the benefits of the domestic procurement provision if they add a minimum of 15% value to the product.
The policy has a waiver for specific kinds of steel not manufactured in the country, or where domestic makers can’t meet the quality standards required by a project.
Key Highlights of the New Policy
- The National Steel Policy 2017 aims to make India self-sufficient in steel production. It projects crude steel capacity of 300 million tonnes (mt), production of 255mt and per capita consumption of 158kg of finished steel by 2030-31, as against the current consumption of 61kg.
- The policy also envisages adequate local manufacturing to meet the demand for high-grade automotive steel, electrical steel, special steels and alloys for strategic applications by the same year.
- It aims to increase domestic availability of washed coking coal in order to reduce import dependence on coking coal from about 85% to around 65% by 2030-31.
- All the government tenders would give preference to domestically manufactured iron and steel products. The domestic manufacturers who import raw materials or intermediate products will be able to claim the benefits of the domestic procurement provision if they add a minimum of 15% value to the product.
- R&D in the steel sector would be carried out through the establishment of Steel Research and Technology Mission of India (SRTMI).
- In 2015, India was the only large economy in the world where steel demand continued to show a positive growth at 5.3 per cent as against China’s (-)5.4 per cent and Japan’s (-) 7 per cent.
- India’s growing urban infrastructure and manufacturing sectors indicate that demand is likely to remain robust in years ahead.
- Despite the current challenges, Indian steel industry still has significant potential for growth, underscored by the fact that the per capita steel consumption in the country at 61 kg is much lower than the global average of 208 kg.
- Crude steel production in 2015-16 stood at 89.77 million tonnes.
However, today, the steel industry in India faces challenging external conditions in the shape of slow economic growth and idle capacity globally. With weak global economic prospects, the industry will have to strongly depend on growth of domestic consumption to surge ahead.
India is the third largest producer of steel globally. The steel sector is contributing to about 2% of the country’s GDP. India had produced 100 Million Tonnes (MT) of steel in 2016-17. Though the National Steel Policy 2005 charted out a roadmap for the sustained and efficient growth of the Indian steel industry, the recent changes in the economic order calls for a new national policy.