Modi gives hope to country’s steel industry

Written by Jaganniwas Iyer

The country’s steelmakers have good reason to be happy with BJP’s prime ministerial candidate Narendra Modi. The steel industry is hopeful that its demand to restrict exports of iron ore further will be met after the BJP comes to power.
 
“The government in Delhi is such that it exports iron ore but imports steel,” Modi said at the rally in the steel city of Jamshedpur last month. "If you run your business like this, how will the country's steel industry survive?” One of the main election planks of the BJP is to revive manufacturing to create millions of jobs by focusing on exporting steel, not iron ore; textiles not cotton.
 
The BJP has promised to consider incentives for steelmakers. Steel imports have increased by a double-digit percentage in recent years. Imports are mainly from countries Japan, South Korea and China. With mills running below capacity, due to shortages of iron ore, imports rose by a steep 15%. Earlier, India was the third-largest exporter, but has since slipped to tenth position. The country has levied a 30 per cent tax on exports of iron ore fines and lumps since December 2011. Since January 2014, a 5 per cent duty on overseas sales of iron ore pellets has also been imposed.
 
Steelmakers however, demand more steps to keep iron ore prices in check and help raise the competitiveness of Indian steel so that they can export more.
 
The BJP aims for a policy shift in the direction of value-added products when it comes to iron ore or other natural resources. Steel industry honchos are of the view that given the country's vast iron ore reserves and its potential to increase further, the best path would be to push for more exploration instead of stifling exports of the commodity. A total ban on iron ore exports is being seen as difficult to achieve, as many traders and companies survived solely on the proceed.
 
The BJP has also promised time-bound environmental clearances and better land acquisition policies to promote manufacturing. The party’s economic vision talks of making India is a global manufacturing giant.

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