The Ministry of Steel, Government of India has recently issued the draft national steel Policy for public discussions.
The policy talk about a vision to create a globally competitive steel industry and to create a self-sufficient steel industry that is technologically advanced, globally competitive and promotes inclusive growth.
The policy also talks about development of globally competitive steel manufacturing capabilities.
However, the realities are far way. Indian steel industry, particularly the large steel plants operate with nearly double costs than the global benchmarks and still produce only plain carbon steel for which there is a glut in the global market.
No surprise that the industry is burdened with nearly one lakh crore non -performing loans and Government has to bring in anti – dumping duties, Minimum Import Price (MIP) etc. to protect it from cheaper import.
The resultant effects are the down the line manufacturers’ are out of the global market and the Indian consumers are paying at least 50% more the global price of steel.
Question is that how long the Government will keep on setting up and supporting such obsolete mammoths when steel are available freely and at cheaper price in the world market.
Incidentally, the MSME producers of steel through electric furnace route are in a better position and remained cost effective through demand oriented production, lower per ton cost and making supplies in small lots as per customer requirements.
So instead of creating steel making capacities in integrated plants Government should encourage capacities in the medium sector, who have high flexibility in modifying product mix and are cost competitive being next to the consumption centres.
In fact such advantages of MSME steel producers have made them largest producers of Steel in India.
While the policy talk about strong MSME sector and its entrepreneurial and innovative strengths there is nothing more for them in the policy.
Government should come out with specific policy package for MSME steel producers, near the major consumption centres and provide soft loan to upgrade technology for making special steels for specific use.
The advantages of Indian small steel producers in today’s world economy are many – they need low investment, smaller parcel of land and provide larger employment per rupee than the large sector.
Though India is 3rd largest producer of steel globally, as the policy says, it is still a net importer of stainless steel and alloy steel used in high-end applications. Today, the domestic stainless steel industry has a low capacity utilization of around 50%.
Source: KNN India.CO.In