India is likely to mandate use of domestic steel in government infrastructure projects as it looks at yet another measure to support the domestic steel industry hit hard by cheaper imports from China and sluggish demand conditions locally.
In addition, it would also rope in central pubic sector enterprises like SAIL, RINL, MOIL, NMDC, KIOCL to play a larger role in boosting manufacturing activities in the country by scaling up investments in greenfield projects and propping up demand through aggressive marketing strategy.
The steel sector that constitutes highest number of stressed assets among Indian infrastructure companies as per RBI has been receiving extra support from the government for past one year in the form of levy of anti-dumping duty, safeguard duty and minimum import price on certain product groups.
Sources said the proposal to mandate use of domestic steel by government projects is also in the series of steps that the Centre is planning to uplift the sector that has the potential to increase NPAs of banks.
In fact, the steel ministry has moved a cabinet note on the proposal and expects clearance to come by month end. “The policy may not mandate use of domestic steel but would seek government infrastructure projects under ministries of railways, urban development, power, shipping and highways to use clauses in tenders that gives preference to locally made steel,” said a government official.
“The measure, while allowing domestic steel to immediately access infrastructure projects worth Rs 4 lakh crore proposed by various government agencies, will also facilitate manufacturing as it allows Indian entities to start making steel grades that till now is only getting imported,” said the official.
The domestic steel industry has welcomed the move saying this should definitely help in making domestic steel stronger again. A JSW steel executive said this should help as recent increase in steel production, as shown by core sector data, has been more on account of meeting the space vacated by lower imports and not because of a demand surge. Additional business opportunity, with a preference, will always help,” he said.
The current financial year has been slightly better for steel companies as surge in imports especially cheaper steel dumping from China has been curbed to a large extend through the use of MIP.
