India's steel production capacity is set to double in the next two years to 120 million tonnes, says Union steel minister Virbhadra Singh. And the target would be met, regardless of the big-ticket , but iffy projects of Posco and ArcelorMittal. It's solid capacity addition in the works, which is credible. But note that steel demand is also expected to surge. One expert projection has it that domestic demand would touch 200 million tonnes by 2015. Besides, given the rising demand scenario worldwide, most global steel players are in a huge capacity expansion mode, although it is likely that excessive debt overhang in several European economies may lead to some steel projects being scrapped.
The writing on the wall is that we can hardly rest on our laurels, despite capacity-doubling around the corner. The way ahead clearly is to proactively iron-out policy glitches that's preventing large-scale coagulation of funds and consequent industrialisation, in some of our most industrially backward, albeit mineralrich, states. The pressing need is for holistic policy in steel, so as to incentivise production of cutting-edge, valueadded steel products. The objective ought to be to end glaring distortions in steelmaking, such as selective access to cheap iron-ore, by means of captive mines, and its mirror image of non-access , complete with a panoply of policy uncertainties, delays and routine opacity.
With some of the best ferrous deposits anywhere, India has competitive advantage to emerge as a global leader in steelmaking. Yet our production is largely autarkic, with little export of high-grade steels for instance. We do need to firm up policy to have a thriving domestic market for ore. Captive mines for steel plants may make sense in hitherto under-industrialised regions, the objective being to lower overhead expenses. But such mineral concessions need to be limited — say for a period of eight years — and once plants are fully depreciated, ore ought to be accessed at market rates. It would incentivise value-addition in steel, long neglected by domestic industry . In parallel, what's essential is a truly forwardlooking land acquisition policy that takes into account the rights and interests of all stakeholders.
The writing on the wall is that we can hardly rest on our laurels, despite capacity-doubling around the corner. The way ahead clearly is to proactively iron-out policy glitches that's preventing large-scale coagulation of funds and consequent industrialisation, in some of our most industrially backward, albeit mineralrich, states. The pressing need is for holistic policy in steel, so as to incentivise production of cutting-edge, valueadded steel products. The objective ought to be to end glaring distortions in steelmaking, such as selective access to cheap iron-ore, by means of captive mines, and its mirror image of non-access , complete with a panoply of policy uncertainties, delays and routine opacity.
With some of the best ferrous deposits anywhere, India has competitive advantage to emerge as a global leader in steelmaking. Yet our production is largely autarkic, with little export of high-grade steels for instance. We do need to firm up policy to have a thriving domestic market for ore. Captive mines for steel plants may make sense in hitherto under-industrialised regions, the objective being to lower overhead expenses. But such mineral concessions need to be limited — say for a period of eight years — and once plants are fully depreciated, ore ought to be accessed at market rates. It would incentivise value-addition in steel, long neglected by domestic industry . In parallel, what's essential is a truly forwardlooking land acquisition policy that takes into account the rights and interests of all stakeholders.
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