Narendra Modi- Make in India vision and Steel hurdles

Prime Minister Narendra Modi- agenda of development primarily focuses on transforming the country into the world’s largest manufacturing hub and curbing imports of finished commodities. But steel can turnout to be the real game-spoiler. Production of steel is marred by various scams and court cases, cheaper steel from China could pose serious challenges for meeting targets.

According to Reuters report, India’s steel consumption is expected to grow at its fastest pace in five years due to Prime Minister Narendra Modi’s infrastructure push, but  scarcity of raw materials means it will be at the expense of another key goal – curbing imports.

It adds that in the first five months of the NDA Government, India- steel imports from China, the world’s biggest producer of the alloy, doubled in April-September from a year ago though, the country has enough capacity to meet its demand.

The report says that contrary to India, China will continue to see a downtrend in steel consumption, which may result into sharp increase in import of cheap steel from that country given the requirements of ‘Make in India’ initiative which is aimed at giving a boost to industrial production.

On the other hand India- domestic steel manufactures stare at stiff challenges from China and are demanding imposition of higher import tariffs. They are seeking better  facilities to increase their productivity.

The report has quoted Ravinder Bhan, deputy general manager of marketing at State-owned Steel Authority of India, as saying that  Make in India slogan should be true for steel sector too. He sought more iron ore and other raw materials for domestic producers, which is not happening at present. 

According to the report, India happens to be Asia the third-largest economy, even though it is counted among top importers of Iron ore and coal, owing to court action against illegal mining that has hit the supply.

The report says that Indian steelmakers such as JSW, Tata Steel and Jindal Steel and Power Ltd, however, run the risk of being priced out by their Chinese competitors.

The report has quoted AS Firoz, chief economist at a Steel Ministry unit, as saying that given the state of global market, the only thing that could be done is to take some protective action to save the (Indian) industry.

“Otherwise you can’t decide what the global prices will be or at what price China will export steel,” he said.

The report has quoted the Ministry- sources saying that the issue of raising tariffs was being looked into. While maintaining the pace of industrial development, the Government is required to facilitate domestic steel producers to increase their production and at the same time it should also give them some protection from getting priced out.

On the other hand a protective approach towards the Steel industry could be detrimental to its growth. Steel production with world class technology may actually be the answer to the situation. With the cobwebs of court hassles getting removed at the earliest possible and open competition from world players may just make the steel production sector fundamentally stronger.

Courtesy Niti Central

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