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Steel industry feels growing-up pangs

Despite boasting of big names like ArcelorMittal, POSCO, Tata Steel and Steel Authority of India Ltd, the domestic steel sector is still waiting for that quantum jump to catapult it to the big league, writes Sumant Banerji.

india Updated: Feb 16, 2009 23:33 IST
Sumant Banerji

Despite boasting of big names like ArcelorMittal, POSCO, Tata Steel and Steel Authority of India Ltd, the domestic steel sector is still waiting for that quantum jump to catapult it to the big league. Though that moment threatened to arrive on numerous occasions in the last three years, it seems the sector needs some more reforms.

With a per capita steel consumption of just 43 kg against the global average of 200 kg, the potential for growth was never in doubt. Steel production grew from 43 million tonnes (mt) in 2004 to 55 mt in 2008. Further, huge reserves of iron ore and the global firming up of prices ensured that all of a sudden everybody wanted a piece of the action here.

Memorandums of understanding (MoUs) all of 193, were promptly signed between Jharkhand, Karnataka, Chhattisgarh and Orissa and the industry. The fresh expected capacity addition is to the tune of 243 mt at investments of Rs 5.14 lakh crore. The spate of MoUs encouraged policy makers to revise production targets to 124 mt by 2010-11 and over 300 mt by 2019-20. The investments required to facilitate this are Rs 276,880 crore by 2012 and Rs 870,640 crore by 2020.

The only problem however, is that a majority of these projects remain only on paper. The country’s largest foreign direct investment entailing POSCO’s Rs 52,000 crore, 12-mt Orrisa steel project is one such example. Almost four years since it set foot on Indian soil, the firm is still waiting for land and mining leases.

“This is one area where the current government has failed completely. After so many years, the mining policy is still not in place,” said Sajjan Jindal, vice chairman, Jindal South West.