As per the financial stability report published by RBI on Thursday, out of the top 10 private steel companies, 5 are tussling with severe financial stress owing to delay in implementation of their projects. The projects have been delayed due to problems with land acquisition, environmental clearances including other factors.
In addition, the steel industry is also tussling with other challenges like access to capital for investment, iron ore shortage, low placed mechanism of mines, lower level of capacity utilization of coal washeries, dependence on imported coking coal and volatility in currency market.
China and Brazil continue to dump their steel products in India amidst lower custom duty and Indian export has fallen drastically due to sluggish demand and high pricing.
“These factors have stressed the Indian steelmakers especially private companies,” mentioned in the report.
The centre has taken many measures like surge in import duty from 5% to 15% on semi finish & finish long steel, improved logistics, increased emphasis on research, development and relaxation on ECB rules, which will support the steel industry to recover from prolonged issues.
Few vital upcoming projects such as Bharat Nirman, The Pradhan Mantri Gram Sadak Yojana, The Rajiv Gandhi Awaas Yojana and the recent highway projects by the government are the silver lining for the steel industry as it will help boost demand.
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