The steel ministry has taken a carrot and stick approach to induce foreign players to set up shops within the country. While carrot comes in the form of the projected demand growth of steel consumption in India, the stick comes from its policy that mandates to provide preference to domestically manufactured iron and steel products (DMI&SP) in government procurement.
The steel ministry is virtually running from pillar to post in its stride to augment country’s steel demand which has remained below par so far. India’s per capita consumption is abysmally low at 61 Kg compared with the global average of 208 Kg in 2015. The anemic demand for steel from construction, which consumes around 65% of the total consumption in India, has had a melancholic impact on the steel industry.
The growth in consumption is almost a given since India has miles to go to catch up with the rest of the world. The country of an aspiring over a billion can not and must not lag behind if its beleaguered infrastructure is to spruce up.
The present dispensation has rightly placed its on infrastructure creation with a heightened budget of around Rs 4 lakh crore for the current fiscal. The steel industry is all set to benefit from the development schemes taken by the government in housing and infrastructure. The proposed pipeline expansion by the oil companies is also set of drive up demand. Capacity expansion by domestic firms will also benefit the steel sector.
Sensing that India is the market to be for any steel company in the world, the steel ministry has aptly taken up the policy of preferential treatment in government procurement. Through this policy, the government has made it near mandatory for all foreign companies willing to cater it the Indian market to set up shops. Any steel coming from overseas must have to do 15% value-addition within Indian soil to bid for government projects. The percentage will go up as the domestic industry builds up capacity for such projects.
“Foreign companies are not realizing the fact even now. As and when they realize the moot point of the policy, they will have nothing but to establish their base in India,” said a senior ministry official.
Posco has already processing centre. So as Gerdau and ThyssenKrupp and a couple of others. Arcelor is expanding its base. Hyundai is also keen on India. The list will only get longer in the coming days.
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