“Indian Steel Ministry Committed for 300 MnT Output” – Steel Secretary

Steel Secretary Dr. Aruna Sharma in an interview with Ruchira Singh for SteelMint elaborates on several new developments & how steel plays a key role in the government’s economic growth plan. Below are the excerpts: 

1. How is the Steel Ministry gearing up to implement the National Steel Policy 2017? Which of the numerous infrastructure projects which are likely to be implemented this year?

National Steel Policy 2017 sets a target to achieve 300 MnT of steel production capacity by 2030-31 and also gives a directional roadmap on how to achieve it. Government is focusing on the development of infrastructure sector with an overall budget outlay of about INR 4 lakh crore for FY18. Following has already been done as a part of implementation of NSP 2017:

1. Clearances have been taken from Indian Railways for laying slurry pipelines which would bring down transportation costs and aid in evacuation of fines and pellets.
2. Policy on preference to domestically manufactured iron and steel products has been implemented
3. Life cycle cost analysis clause has been included in GFR guidelines
4. Creation of fresh steel capacities via green-field projects in resource rich states like Jharkhand, Chhattisgarh, Odisha and Karnataka, by setting up of the SPVs, is being facilitated.
5. Task forces have been constituted in conjunction with different ministries to increase steel demand in their respective areas.

2. There is talk in the industry that domestic companies are using the preferential purchase rule to hike prices – will the steel ministry check this? How?

Domestic steel players had been adversely affected by the predatory pricing strategy followed by a number of foreign players. Moreover, India has steelmaking capacity of 126 MnT as on 31st March 2017, with a capacity utilization of 77%. The policy is also a price regulator in itself in a sense that it provides room for foreign manufacturers to participate in the government tenders, if they can do the minimum prescribed value addition in India. Hence, the policy will also provide boost to the foreign investments which are always welcome through 100% FDI in the steel sector under the automatic route.

3. In the wake of Posco’s exit, are there other foreign companies that are still interested in building plants? If yes, how is the steel ministry encouraging them?

There is already a memorandum of understanding (MoU) signed on 22nd May 2015 by Steel Authority of India Limited (SAIL) with Arcelor Mittal, to set up an automotive steel manufacturing facility under a joint venture arrangement in India, and the JV is under advanced stages of finalization.

Tata Steel has a joint venture with Japan’s Nippon Steel for production and sales of automotive cold-rolled flat products at Jamshedpur. The JV is expected to invest USD 400 million (INR 1,850 crore) to set up an automobile venture in India. Similarly, JSW Steel signed an agreement with Japan’s second largest producer, JFE, to collaborate for making automobile steel.

4. How is the ministry dealing with debts of the steel industry? Will more companies be asked to restructure debt? Can companies expect any help or waivers etc from the government?

Yes, stress in steel sector needs to be resolved at the earliest. Already quasi-judicial mechanisms are in place. National Company Law Tribunal is looking at the issues. We expect early resolutions using all authorized instruments approved by RBI.

The concern is to ensure that the credit flow is continued in the steel sector, especially to secondary steel producers, whose non-performing assets are negligible. Essentially these bad loans are with the large steel players. The smaller steel players, which are highly agile and located as strategic clusters, have cleaner balance sheet and high debt-service coverage ratio. Ministry of Steel is also making efforts to facilitate credit availability for small steel players in consultation with banks and various investment institutions. Also, with the signing of the new NPA ordinance by the President, steel sector is on the priority of the government to ease out the issues of stressed assets in the sector.