| Defence minister Pranab Mukherjee and finance minister P. Chidambaram talk to reporters after the cabinet meeting that cleared the National Steel Policy in New Delhi on Thursday. (PTI)
New Delhi, Nov. 3: The cabinet committee on economic affairs (CCEA) today approved a national policy aimed at making the steel industry globally competitive.
The National Steel Policy (NSP), as it is called, envisages a modern and efficient steel industry of world standards. “The aim of the policy is to make the industry globally competitive not only in terms of cost, quality and product-mix but also in the areas of efficiency and productivity,” an official statement said.
The policy seeks to adopt a multi-pronged strategy. On the supply side, it calls for the creation of additional capacity, removing policy bottlenecks in the availability inputs like iron ore and coal, ensuring higher investments in research, fostering skill development and bolstering roads, railways and ports.
The document cleared today sees local production at over 100 million tonnes annually by 2019-20 from the present level of around 38 million tonnes. This has assumed a compounded annual growth rate of 7.3 per cent.
On the demand side, the strategy would be to strengthen the delivery chain, particularly in rural areas. Special efforts should be made for the promotion of steel in construction and in the backwaters.
The policy talks of encouraging steel firms to acquire coal equity abroad ' essentially, stakes in foreign mines ' to enter into pacts that allow barter of high-grade iron ore for premium-quality coking coal. Companies will be encouraged to tap natural gas as an alternate fuel as one of the ways to achieve cost savings. They will also be given incentives to set up dedicated ports for steel plants; inland waterways, along which raw material and finished products can be ferried cheap, will be expanded to boost the industry.
A separate policy on iron ore will be drawn up, offering incentives for conservation of scarce resources even as the existing reserves are tapped fully. A single-window system of awarding licences for prospecting in mines could also turn into a reality if the government follows the policy’s suggestions.
Chambers welcomed the steel policy, describing it as a move that would help the industry become globally competitive. “The policy paves the way for India to emerge as a leading supplier of steel to the world in the years to come,” Ficci said in a statement released this evening.
While a SAIL spokesman, however, said he would comment after going through the fine-print, Posco, which has planned a Rs 52,000-crore steel project in Orissa, was cautious in its reaction to the decision. “We hope the policy would smoothen our investment process,” it said.
Essar Steel said the policy recognises the importance of steel for supporting the rapidly expanding Indian economy. “The policy has hit the nail on the head by recognising the need to provide an assured supply of raw materials like iron ore and coal,” director J. Mehra said.
Assocham said the long-awaited policy was necessary for an industry that aims to grow at 7.3 per cent every year. “The government should create a conducive environment so that steel production grows manifold,” chamber president Anil K. Agarwal said in a statement.
The cabinet panel put its seal on a planned amendment to a double taxation avoidance pact with Italy. This will boost trade and investment between the two countries.
The government also agreed to sign up to a 1998 agreement on global technical regulations (GTR) for automobiles.