Govt to ensure rising steel prices don’t push up infrastructure project costs

20 November 2017

The government will ensure rising steel prices do not lead to increase in cost of infrastructure projects.

This is particularly significant since the steel ministry has already notified that preference will be given to locally made steel for procurement by the government and public sector undertakings.

Rise in input costs and an improvement in demand, especially from segments like housing, railways and automobiles, led to the firming up of steel prices in the past few months.

A slew of policy measures taken to protect the domestic steel industry from the threat of cheap imports have also started making a positive impact on the industry.

During April-October 2017, consumption of total finished steel increased 4.5% to 50.33 million tonne over same period of the previous year.

“We will ensure there is no cartelisation, but at the same time we do not want prices to fall since it affects the companies.

Our objective is to see that Indian infrastructure construction does not become expensive,” steel secretary, Aruna Sharma said in an interview with ET. She said mechanisms such as reverse auction would help ensure international price discovery.

The GAIL (India) tender was case in point, she said. It had invited bids for the Vijaipur-Auraiya-Phulpur pipeline project, but cancelled it following notification of the government policy in May 2017 that called for preferential procurement of locally produced steel in government projects.

An exception was to be made only where specific grades of steel are not manufactured in the country or where the quantity sought cannot be met from domestic sources.

“While the initial cost may appear a bit higher, promoting the use of steel in infrastructure projects not only makes the lifecycle cost affordable, but is also low-maintenance and environment-friendly,” she added.

Source: ET