India Steel Market Watch
October 6: In order to build the Indian steel sector in a strategic, commercially viable and environmentally friendly way, not just “Make in India”, but “Make Steel in India” is actually needed, according to the National Council of Applied Economic Research (NCAER), India’s oldest and largest economic think-tank.
And in order to make it feasible, the government should consider formulating a new steel sector white paper, with inputs invited from the industry, economists, other market analysts, upstream and downstream industries and policymakers, NCAER said.
Such a White Paper should have the explicit goal of examining what is needed in the short, medium and long term to realise the full potential of the sector.
The suggestions were put forward in the latest research study on India’s steel industry, “The Indian Steel Industry: Key Reforms for a Brighter Future” prepared by NCAER.
The NCAER research study, sponsored and facilitated by TATA Steel, was launched at a special function in New Delhi by Dr V K Saraswat, Member, NITI Aayog.
The NCAER study finds that the enthusiasm about Make-in-India appears to be bypassing the steel industry. The current condition of the Indian steel industry is dismal, with low profits, low capacity utilisation and dim prospects for new private investment, either foreign or domestic. The study clearly establishes that the industry is also hampered by inadequate demand and other cyclic, macro-economic factors.
While releasing the study, Dr Saraswat noted that there is a need for the industry, think tanks and policymakers to start looking at all factors holistically, especially those related to domestic taxation, inverted duty structures, raw material costs and transportation. The Commerce, Steel, Coal, Finance and railway ministries need to have a synergistic and integrated outlook to de-stress the sector. Steel being the basic industry to increase the share of manufacturing in the country, policies are to be tuned at par with the emerging foreign trade structures.
Cautioning the harsh global steel industry scenario, the NCAER study’s principal author, Dr Ramgopal Agarwala, said the economy was still on the downside cycle without clear indications of a decided upturn. He has cautioned that many of the investments made during the last upturn are coming onstream just when the demand for steel remains weak because of the yet uncertain investment climate in India and globally.
According to Chanakya Chaudhary, Group Director for Corporate Communication & Regulatory Affairs, Tata Steel, while the government has taken cognisance of these challenges, and is making efforts to provide an impetus to the steel industry, there is a need for a long-term policy perspective for creating a sustainable steel industry in India.