Cabinet clears National Steel Policy that favours Indian steelmakers

Under the new National Steel Policy, priority will be given to Indian steelmakers in government tenders for infrastructure projects, says finance minister Arun Jaitley

Tarun Shukla, Komal Gupta
Updated4 May 2017
Cabinet has approved the National Steel Policy, which seeks to outline a roadmap to increase the country’s annual steel production to 300 million tonnes by 2025. Photo: Abhijit Bhatlekar/Mint
Cabinet has approved the National Steel Policy, which seeks to outline a roadmap to increase the country’s annual steel production to 300 million tonnes by 2025. Photo: Abhijit Bhatlekar/Mint

New Delhi: The cabinet cleared wide-ranging economic measures on Wednesday, including a national steel policy that favours domestic manufacturers in government projects.

“All government tenders will give preference to domestically manufactured iron and steel products. There will be a condition in it (tender) so that the surplus capacity is consumed,” said finance minister Arun Jaitley.

Indian steel makers who import raw materials or intermediate products can claim the benefits of the domestic procurement provision if they add a minimum of 15% value to the product.

The policy has a waiver for specific kinds of steel not manufactured in the country, or where domestic makers can’t meet the quality standards required by a project.

“This is a supportive mechanism to the domestic steel producers. This will also go a long way to address the growth appetite the government is envisaging. It will further boost demand,” said Anjani Agrawal, global steel leader at audit and consulting firm EY.

The National Steel Policy 2017 aims to make India self-sufficient in steel production. It projects crude steel capacity of 300 million tonnes (mt), production of 255mt and per capita consumption of 158kg of finished steel by 2030-31, as against the current consumption of 61kg. The policy also envisages adequate local manufacturing to meet the demand for high-grade automotive steel, electrical steel, special steels and alloys for strategic applications by the same year. It also sees an increase in domestic availability of washed coking coal so as to reduce import dependence on coking coal from about 85% to around 65% by 2030-31.

“The 300 million tonne (capacity by 2030-31) is an ambitious target; we should be careful in calibrating the capacity additions to real long-term domestic demand of steel rather than hoping to rely on export markets,” EY’s Agrawal added.

Among other key decisions, the cabinet approved modifications in the recommendations of the 7th Central Pay Commission (CPC) relating to the pension of pre-2016 pensioners and family pensioners based on suggestions made by a committee chaired by the secretary (pensions).

The modified formulation will entail an additional benefit to the pensioners and an additional expenditure of about Rs5,031 crore for 2016-17 over and above the expenditure already incurred in revision of pensions as per the second formulation. It will benefit over 5.5 million individuals.

The cabinet also approved the retention of percentage-based regime of disability pension implemented after the 6th CPC report, which the 7th CPC had recommended be replaced by a slab-based system.

The issue of disability pension was referred to the National Anomaly Committee by the ministry of defence on account of a representation received from the Defence Forces to retain the older system. The representation argued that the new system would reduce disability pension.

The cabinet also approved international status for the Vijayawada airport and the disinvestment of properties of the India Tourism Development Corporation Ltd (ITDC).

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