Steel minister asks industry to meet entire domestic demand for high-grade auto steel

Speaking at the ‘Make In Steel’ conference in New Delhi today, Steel Minister Chaudhary Birender Singh said the government is working on a comprehensive strategy to generate steel demand in the country.

He called upon steel manufacturers to work towards meeting the entire domestic demand for high-grade automotive steel, electrical steel and special steels from domestic production. These products constitute a major portion of the steel imports in India, he said.

The steel industry has one of the highest economic linkages in overall GDP. Steel has an output-multiplier effect of around 1.4 times on GDP; so if the steel industry grows by 1 percent, its proportionate impact on GDP would be 1.4 %. Employment-multiplier effect of steel is around 7 times; with increase in output, the steel industry has the potential to create 7 times the job opportunities, in upward and downward industries.

Birender Singh said the steel industry needs to actively demonstrate the benefits of steel and called for increased marketing and branding to drive sales of steel and to counter the challenge of product substitution.

He said India is on its way to become the world’s second largest steel producer. “The gap between India and Japan was 16 million tonnes in 2015, which has come down to 9 million tonnes in 2016. India’s share in global steel production was 5.5 % in 2015, which has increased to 5.9 % in 2016. In the draft National Steel Policy, we aim to more than double the capacity to 300 million tonnes. That means an investment to the tune of Rs 10 lakh crore. We definitely need to create demand in line with the planned increase in capacities. Our target is to increase per capita steel consumption to 160 kilograms.”

Scrap-based steel plants in India being considered 
The government, the minister said, is examining the feasibility of setting up scrap-based steel plants in India. These will be on the lines of ‘Melt & Manufacture’ steel technology in USA.

Scrap-based steel plants are environment-friendly, energy-efficient and cost-effective and have the capability to produce special high-quality steels.

The minister has called upon industry to deliberate on the cost-benefit analysis of setting up scrap-based steel plants in North and West India, which are  important  from  the  perspective  of scrap-availability and steel import hubs.

He said the MSTC-Mahindra Intertrade state-of-the-art auto shredding plant is likely to be functional in 2018. The Indian market has huge potential for auto-shredding. As per reports, there are more than 700,000 cars and over 400,000 trucks and buses which have reached end-of-life stage. By 2025, around 2.8 million cars and 1.2 million trucks and buses will reach their end-of-life stage.  

“India imports around 6 million tonnes of scrap steel every year and is the second largest importer of scrap after Turkey. By 2025, we will be able to generate 7.5 million tonnes of scrap every year,” Birender Singh said.

PSU productivity lags behind private steel firms

In terms of productivity, India is lagging behind international benchmarks of performance. “At country level, PSUs need to catch up with the productivity and efficiency levels achieved by private steel companies. At international level, all Indian steel companies need to aim high and work towards achieving international levels.

Research & Development in the Indian steel industry is dismal. Whatever little R&D is being done is scattered and isolated. At one hand, there is overlapping and duplication of research efforts, and at the other, no research is being done on future requirements of the industry. We are happy and contented with token R&D here and there,” he said.

“We are capable of producing auto-grade, defence-grade and other special steels in India. What we need to do is to push ourselves and to come out of our comfort zones. Then and then only can we be self-sufficient and strong.  

We are trying to bring together all R&D efforts under one umbrella of SRTMI (Steel Research & Technology Mission of India) with public-private partnership. The Ministry of Steel is in  touch with different user ministries to ensure that steel-intensive structures are promoted through regulatory, advisory and other measures. We are in the process of talking to hill states to increase use of crash barriers to minimise fatalities due to road accidents on hills. The Rural Development Ministry has already recommended use of steel-intensive structures in rural housing.

At present around 40 % steel consumption is from construction and infrastructure sectors, and we want to take it to 60 percent in long-term.

In the Budget, the government has waived basic custom duty on nickel and reduced custom duty on specific-use grades of hot-rolled and cold rolled steel coils. The decision to cut down customs duty to on LNG (liquefied natural gas) will boost domestic steel companies that rely on imports to run gas-based steel plants. All these decisions will go a long way in ensuring that the Make in Steel drive is successful in India.

All these efforts will mean nothing, if we are not able to produce steel of high quality. If we want to compete at international level, we will have to perform as per international benchmarks of efficiency and quality. It is my firm belief that Indian steel industry needs to move to a 100 % quality regime, for health and safety of end users. That is why we are going ahead with making BIS certification essential for most of the products.”

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