The Union government plans to facilitate the creation of a Rs65 crore fund that will finance research and development (R&D) in the steel industry, to improve the quality of steel produced in the country.
Called Steel Development Research Mission, the fund will be in place by the end of the year, Union steel secretary R.S. Pandey said here after a seminar on opportunities in the steel industry, organized by the Confederation of Indian Industry (CII).
“The entire industry will make a one-time contribution of Rs20-25 per tonne of current production,” Pandey said. “However, the government will not make any contribution, but will act as a facilitator,” he added. The steel secretary said the new mission would operate in “virtual mode” and won’t involve the setting up of any new infrastructure or offices. “The mission will make use of existing infrastructure to pursue research.”
The steel secretary said the need for such a fund to power R&D has become urgent because most of the “benchmarks of production” of the Indian steel industry are lower than the world standards. “Today, everyone is making profits, even the inefficient producers,” Pandey said.
“But the world is increasingly becoming borderless and those who don’t produce quality steel at a competitive cost will be swept away,” he added.
Sounding a note of caution, Pandey said the cost of imported technology is exorbitantly high, with suppliers “quoting prices two-three times the global standard”. “Whether this is because of a cartel or an overheated sellers’ market is difficult to say,” he said.
Outlining the roadmap for the Indian steel industry, the steel secretary said 150 million tonnes (mt) of capacity is expected to be added over the next 15 years. “At an investment of Rs4,000 crore to make one million tonnes of steel, we are looking at Rs600,000 crore,” Pandey said.
Steel Authority of India Ltd (SAIL) chairman S.K. Roongta said the challenge before the industry is to improve the quality and availability of steel.
“Even now, there are large areas where steel is not easily available,” he said. “Large infrastructure projects and big builders are reluctant to go in for steel-intensive structures because they fear they may not get the right size and quality at the right time.”
Roongta, who said SAIL plans to increase production to 26mt per year by 2010, stressed that the industry needs to grow in a cost-effective manner.
“High capital costs will either be passed on to the consumer and, given the market dynamics, if it can’t, then it will hit the producers,” he said.
Ruing the shortage of skilled manpower, Roongta said, “We are just at the take-off stage now and are already feeling the pinch. We need more collaboration with universities and engineering colleges to get steel-industry-ready manpower.”