Indian Govt to Make Domestic Steel Mandatory for Govt Projects Soon

Government and its agencies will have to soon start procuring India-made steel mandatorily on preferential basis. The plan, mooted by the steel ministry with the aim of boosting domestic consumption, is slated to get the go-ahead of the union cabinet and come into effect in the next few weeks.

Sources in the steel ministry said that a note for the cabinet, following proper inter-ministerial consultation, has been prepared and sent to the Prime Minister’s Office (PMO). The proposal would not require Parliament’s approval to become effective.

Analysts said that the move would be doubly beneficial for the domestic steelmakers — it will help boost their sales, pricing power and thus, their profit margins and secondly, imports would rein in further. This will also encourage domestic major to make further investments in capacity building.

Boosting the morale of the domestic industry is also a must as the government is targeting to take country’s annual steelmaking capacity to 300 MnT by 2030-31 from around 120 MnT now, entailing an estimated INR 10 lakh crore investment, under a new steel policy.

Incidentally, the steel ministry has also sought the cabinet’s stamp of approval, simultaneously with the mandatory steel procurement policy by government and its agencies, for the new policy to come into effect.

The draft steel policy admits that capital mobilisation could be a challenging task given the enormity of the fund required in the current situation of the industry.

India’s steel production grew by over 11% during the first 11 months of the 2016-17 fiscal to stand at 92 MnT. Even as India has become a net exporter of steel during the period, domestic consumption has remained subdued at 76 MnT, growing by just 3.4% over the corresponding period of the previous fiscal.

India’s Steel Scenario:

(Source: Joint Plant Committee)