November 04, 2016 07:56:56 AM
NEW DELHI (Scrap Monster): The apex industry body ASSOCHAM has submitted various suggestions to the Steel Ministry, aimed at boosting steel sector growth in India. The industry body also highlighted various issues that hinder the growth of steel sector in the country.
ASSOCHAM requested the Indian government to grant strategic industry status to steel sector. Highlighting on the various reasons for high cost of steel production in the country, the industry body noted that either the Union government or the state governments must intervene quickly to bring down road freight rates. It noted that local monopolies do exist in the country. Higher transportation cost results in higher steel production costs, ASSOCHAM noted.
The apex body also demanded immediate withdrawal of import duty of five per cent imposed upon metallurgical coke and coking coal. In the paper submitted to the Steel Ministry, it noted that withdrawal of duty is necessary to restore competitiveness in the domestic steel industry. It also urged the Ministry to cut the royalty on iron ore. The 15% royalty on iron ore coupled with royalties paid to district mineral foundation (DMF) has created heavy burden on the sector. In addition, the government must do the needful to reduce the 10% DMF rate for new mines, it said.
ASSOCHAM has demanded the government to include pig iron, sponge iron and billets in the list of products covered under MIP. Also, imposition of Minimum Import Price (MIP) and safeguard/import duties on wide range of products may help prevent increased imports of cheaper steel products from other countries, especially China.
The government should devise a special funding mechanism for providing capital for brown-field expansion of capacities at the existing steel mills. The fall in demand for steel and drop in steel prices have led to many steel companies making default on interest payments, recently. However, the sector in on a revival, it noted. Hence, banks should willingly extend working capital loans to steel companies, ASSOCHAM suggested.
Meantime, P Madhusudhan, chairman and managing director of Rashtriya Ispat Nigam Limited (RINL) stated that the Indian steel industry has every potential to grow tremendously over the forthcoming years, with government’s support. According to him, government policies need to be implemented to reduce customs duty and prevent cheap imports into the country.
According to him, the steel sector is currently in a slowdown in both domestic and global markets. Despite the slowdown, the domestic steel industry in India is hopeful of a comeback soon. Mills need to incorporate state-of-the-art technologies to ensure high productivity. The country must reduce the dependence on technology suppliers from abroad by promoting indigenous technologies, he said. Necessary policy actions to reduce fuel costs, freight costs may result in huge cost-cutting benefits for steel companies, he added.
The latest production statistics released by the World Steel Association says that Indi’s crude steel output surged higher by 8.5% in September this year. The output totaled 7.88 Million tonnes (Mt), as compared with the output of 7.264 Mt during September last year. The cumulative crude steel output by the country during the initial nine-month period of the year totaled 71.09 Mt, 5.9% higher when compared with the output of 67.13 Mt during the corresponding period in 2015.