Steel is a deregulated sector,” said Minister of State for Mines, Steel and Labour & Employment, Vishnu Deo Sai in a written reply to a Lok Sabha query. The role of the Government is that of a facilitator. As such no licence or permission is required from the Ministry of Steel for setting up of steel plants in the country, he further added. The decisions relating to project investments and implementation are taken by the concerned investors keeping in view the market conditions. As per the available information, there are around 3,700 steel factories in the country mostly located in the States of Jharkhand, Bihar, Odisha, Chhattisgarh, Andhra Pradesh, West Bengal, Karnataka and Maharashtra.
The state of steel production is quite a challenging process in India. Despite the fact that deregulation was initiated way back in 1991-1992, when the new economic policy was ushered in, but it still faces lot of hurdles. A glance through the facts of state of steel production gives the broad picture.
While global production of steel stands at 1527 metric tonne (MT), India’s contribution stands at 72 MT. Standing at fourth position as steel producers, we are the third largest consumers of steel. However, the projected capacity of production by 2016-2017 is 150 MT (more than double than what we produce now) and is expected to rise to 200MT by 2019-2020.
While not needing licence to become a steel producer is a great relief, India has seen lot of big ticket projects either getting stalled or cancelled due to bureaucratic hurdles. Land acquisition along with environment clearances have been the biggest ones. ArcelorMittal scrapped its Rs 50,000 crore steel project in Keonjhar, Odisha over inordinate delays, problems in land acquisition and unresolved issues in securing iron ore linkages. “ArcelorMittal today met with the Government of Odisha’s Chief Secretary to inform him that the company has decided not to progress with its planned construction of an integrated steel plant and a captive power plant in the district of Keonjhar,” the company said in a statement, according to a July 2013 PTI report.
Similarly, an NDTV report in February 2013 said that POSCO halted land acquisition for its Rs 52,000 crore project in Odisha. Most of these projects were abandoned or halted since environment clearances were stalled or land acquisition issues were unresolved, and NGO backed tribal protests were used as instruments to block these projects.
The UPA Government was not only keen to appease allies but also various lobbies because of which Ministry of Environment and Forest (MoEF) had come to symbolise a dragon which never gave clearances. The Ministry came to be known for Jayanti Tax (after Jayanti Natarajan, who was the Minister for quite a while) which was basically a bribe to get environment clearances.
Immediately after assuming power, Narendra Modi’s Government took the initiative to give e-clearances for all environment related issues through a single online window. However, land acquisition hurdles are a major issue for any big investor to turn towards this sector. Voter appeasement tactics by the UPA left behind a business unfriendly Act because of which even State Governments are unhappy. According to a Business Today report, 106 projects (of various kinds) have not been lucky in getting land clearances. They have been stalled over the past two years because of land acquisition problems. According to the Centre for Monitoring Indian Economy, 70 of those were worth Rs 3,52,480 crore. About 30 per cent of these were Government projects, while the rest was in private hands, both Indian and foreign. In the last year of the Congress-led UPA Government, projects worth Rs 1,81,126 crore got stalled, shelved or abandoned.
The report further states that Arvind Panagariya, economist and Professor at Columbia University, says that the Act is “damaging” for both the seller and the acquirer. “With the cost in terms of time as well as money multiplied manifold by the Act, no new land acquisition has taken place since January,” he says. He maintains the Act will adversely affect both urbanisation and development.
While it is true that Indian steel plants have much better emission standards as compared to global parameters (globally 18 Tonnes of CO2 /tcs is emitted. India emits only 2.5-3 T/tcs) steel production would be a critical factor economic revival programme.
Surely, a decisive team-Modi can play a vital role in rejuvenating Steel sector, which has much room for development and power to trigger the growth engine.
Source: Niti Central
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