Ministry takes up cause of small steel producers

Ministry takes up cause of small steel producers

The steel ministry on Tuesday expressed concern over rising steel imports and warned that unless production of the alloy grew, it could spell a crisis for the domestic steel industry.

“After due examination, we found out that steel imports have shot up by 4.18 million tonnes (mt) between April and November this year against 2.3mt in the same period last year, marking an increase of 77%, which is a cause of serious concern," a top steel ministry official said.

Although production has improved by 6.7% from 31.66mt to 33.6mt during the period, consumption too has substantially grown by 12.6%.

“After reviewing the situation, it was found that in the absence of new capacities and rising input prices, small steel producers were being affected, so they were resorting to imports to meet their domestic requirements," he pointed out.

Iron ore spot prices have risen by more than $50 (Rs1,975) during the past few months, putting the small-scale producers at a disadvantage. Besides, steel prices in the international market have been somewhat stable “and that was leveraged by the small-time producers to hold on to their clientele," the official said.

Surprisingly, steel exports too have risen 6% to 3.38mt during April to November this year against 3.16mt in the same period last year.

“A stumbling block in the way of new capacities is the undue delay in land acquisition. Take the case of Posco and Tata Steel, both are facing problems in taking physical possession of their land," he said.

Moreover, allocation of captive mines remains a big problem as the mineral-rich states are rarely able to take any decision in this connection.

“What is more concerning is the fact that mining is becoming more prone to litigations. So, there is clearly a case for reviewing the entire gamut of issues relating to the mining sector," the official said.

“The inter-ministerial group (IMG) constituted by the government is regularly reviewing the situation. We are trying to talk to the concerned ministries and state governments as well as the stakeholders on how to streamline various procedural delays," he said.

In its last meeting on 31 October, the IMG reviewed the situation and has sought the opinions of the departments concerned on various issues in the steel sector.

“We are envisaging an investment of about Rs276,000 crore in the steel sector within the next five years and these investments would not fructify if issues impeding them are not sorted out in due course of time," the official said.