Execution is the key to New Steel Policy’s success, say industry majors

08 May 2017

The government’s decision to make purchase of domestic steel mandatory in select government projects will revive demand and give a much-needed impetus to steel companies reeling under debt burden. The steel policy comes when the government has chalked out plans to invest over ₹3 lakh crore in infrastructure projects this fiscal. However, implementation of the various provisions in the policy remains a concern.

Ravi Uppal, Managing Director and Group CEO, Jindal Steel and Power, said while the policy has done well to address both the supply and demand side concerns, the key challenge lies in its implementation.  The government should set up two working task forces — one to ensure that domestic steel is used in large infrastructure projects and the other one to make sure that raw materials such as iron ore, coking and thermal coal are available at competitive price, he said.

The financial situation of the highly leveraged capital-intensive steel sector should be eased with an interest subvention of four per cent with funding period extending up to 25 years like it is provided for hydro projects, said Uppal.

To attract fresh investment, new steel plants with public-private partnership can be set up to gain lenders’ confidence while raising funds and tap into the operational efficiency of the private sector, he added.

Jayant  Acharya, Director (Commercial & Marketing), JSW Steel, said the mandatory domestic steel purchase can be implemented through the right guidelines and proper documentation like it is done in the US, China, Japan and other countries. It is imperative to make the existing investments in the steel sector profitable by increasing the demand and capacity utilisation before attracting fresh funds into the sector, he said.

TV Narendran, Managing Director, Tata Steel, said the company looks forward to the implementation of the policy and the forecast growth of the steel consuming sectors, while it works with the government to address supply-side issues such as raw material availability and debottlenecking logistics constraints in realising the goals of the policy. “We believe that the focus on infrastructure-led growth will not only support steel demand but also help achieve world class cost efficiency outside our factory gates,” he said.

Source: The Hindu Business Line