Govt procurement from domestic steel sector can act as a major stimulus: Tata Steel


KOLKATA:Tata Steel has said government procurement from domestic steel sector can act as a major stimulus for demand creation projects like Rurban (rural-urban) and Smart Cities. With regard to budget expectations the company said it is likely that a significant number of infrastructure projects would be announced, which could further push the demand of steel by 10% to 15 %.

“While short term measures like safeguard duty and Minimum Import Price (MIP) has provided certain amount of relief, the need of the hour is permanent measures. Measures like reduction or removal of import duty on certain raw materials like iron ore, coke and metallurgical limestone will also help trigger demand,” T V Narendran, Tata Steel managing director (India & SE Asia) said in a statement.

Due to limited availability in India, steel manufacturers depend on the import of these raw materials, and at such trying times even a 2.5 % import duty greatly impacts cost of production and other operational costs. It is necessary to streamline the supply of raw material at competitive prices to maintain the economic viability of existing projects and hence provide incentive for investment in expansions. Indian industry continues to look forward to bring in GST with changes suggested by the CEA Panel which we believe will help simplification in the taxation processes and increase efficiency, the statement added.

Over the last year, the Government has put in a lot of effort putting in place various building blocks. From administrative reforms such as setting up of the NITI Aayog to launching flagship programmes such as the Prime Minister’s ‘Make in India’ initiative and ‘SMART cities’.

The past one year has been one of the most difficult phases for the domestic steel industry. While the government set a target of producing 300 million tonne (mt) by 2030, the industry seems to be wobbling at current production levels. According to the Steel Ministry’s Joint Plant Committee (JPC), production of crude steel during April – December 2015 has been stagnant, growing at 0.9% compared to the same period last year, to 67 mt. The trend for demand has been equally dismal.

During the same period, the industry has been facing the impact of a continued surge in imports which grew by 30%, this time from a higher base and predatory pricing from countries like China which have more than 400 mt of capacity surplus. The sector unfortunately also represents a huge proportion of the banks’ non-performing assets (NPA) on account of stalled projects, the statement said.