New Delhi: A Parliamentary Committee on Tuesday suggested that the government should review at the “highest level" the market opening trade pacts with Japan and South Korea in a bid to check import of cheap steel products.
The Standing Committee on Coal and Steel, chaired by Rakesh Singh, also recommended that government should initiate measures to bring down the production cost of steel through rationalizing transportation costs, developing coastal and riverine chipping among others.
The committee in the report, which was tabled in Parliament on Tuesday, said that as per the demand of the steel ministry, certain other measures like review of Comprehensive Economic Partnership Agreement (CEPA) with Japan and Korea is required as this agreement has resulted in huge jump in imports from these countries, it said.
The panel appreciated the measures taken by government to bail out the beleaguered steel industry reeling under an “unprecedented crisis". “...the committee recommend that the matter regarding review of CEPA with Japan and Korea should be taken at the highest level to check rising imports from these countries," the committee suggested.
The committee also directed the steel ministry to apprise it of the status of the proposal for corporate debt restructuring whereby the loans given to steel companies can move towards longer term loans with low rate of interest.
The committee further desire that all out efforts be made in bringing down the cost of production, it said. “Such steps may include development of coastal shipping and riverine shipping and tailor made packages with railways, etc to cut down transportation costs, giving boost to national skill development campaign for improving labour productivity, etc," it added.
It asked the government to apprise it of the specific measures taken in this direction. The panel suggested that state-run steel makers Steel Authority of India Ltd (SAIL) and Rashtriya Ispat Nigam Ltd (RINL) should focus on improving production and efficiency at various levels and improve profit by developing and marketing new products given the major crisis in the sector and the glut in the market due to cheap imports.
The committee also raised concern over state-run iron ore miner NMDC Ltd reducing its net profit target to ₹ 645 crore for the current fiscal. As regards the profit after tax (PAT), it increased from ₹ 6,420 crore in 2013-14 fiscal to ₹ 6,422 crore in 2014-15. During 2015-16, PAT of ₹ 2,475 crore had been generated up to December 2015, it said.
Despite all this, for 2016-17, a target for PAT has been kept “very low" at ₹ 645 crore only, the panel added. “The committee fail to understand the logic of reducing the profit target so drastically for 2016-17 by NMDC. The committee would, therefore, like to be apprised of the reasons for such drastic reduction in PAT targets and steps taken by the company to improve its financial performance," it said.