Steel ministry plans additional Rs 10 lakh crore investment in draft policy

16 January 2017

The union steel ministry’s draft New Steel Policy 2017 estimates Rs 10 lakh crore of additional investment to create capacity that will meet anticipated crude steel demand of around 255 million tonne (mt) by 2030-31. A major part of that demand is likely to come from infrastructure like highways, oil refineries, bridges, airports, urban infrastructure , water transportation and sanitation, construction, engineering, automotive, energy, packaging and Railways among others.

The policy envisages a crude steel capacity of nearly 300 mt by that time which is similar to the earlier target set by the National Steel Policy 2005. India has emerged as the 3rd largest steel producer globally with a production level of 91 mt and a domestic steel capacity of 122 mt in 2015-16.

However, in a key admission the policy recognizes shortage of metallurgical coal as a major disadvantage of the steel sector, the draft steel policy aims at increasing supply of domestic coking coal to cut dependence on imports by half. India currently imports around 70% of its coking coal requirement. The National Steel Policy also aims at achieving increased domestic availability of washed coking coal so as to reduce import dependence on coking coal by 50% by 2030-31. The draft policy document has been put up on public domain and the steel ministry has sought comments on the draft from stakeholders, public and others by January 23, 2017.

“The draft policy aims to ensure that the steel sector follows a sustainable path of development in respect of augmenting capacity to 300 mt by 2030-31 in an environment friendly manner,” the draft policy said. Total production of finished steel is estimated to be around 230 mt by 2030-31. It also targets exports at 10% of the total finished steel production. The policy estimates are based on an assumed GDP growth rate of 7.5% year-on-year.

As part of the draft policy per capita steel consumption is poised to go up to 160 kg by 2030-31 from the present level of around 61 kgs. Incidentally, global average per capita steel consumption is way ahead at 208 kgs. The policy draws inspiration from the fact that in 2015 India was the only large economy in the world where steel demand continued to demonstrate positive growth at 5.3%, against negative growth of 5.4% in China and 7% in Japan.

The new policy has set an aim for India to become a net exporter of steel by 2025-26, while it also recognizes that weak global economic prospects indicate Indian steel industry will have to strongly depend on domestic consumption for its future growth.

Source – ET