Overhaul steel policy: NITI Aayog’s Saraswat
Since the steel industry is in the doldrums, India’s steel policy of 2012 needs an overhaul so as to meet the target to raise capacity to 300 million tonnes a year by 2025


  • NITI Aayog member V.K. Saraswat has called for an overhaul of India’s steel policy framed in 2012 as the country is unlikely to meet the target to raise capacity to 300 million tonnes a year by 2025 with ‘mere tinkerings in the present policy’ because the steel industry is ‘in the doldrums.’
  • Though India is now the third largest steelmaker in world, a global slowdown and a surge in cheap imports from China, Russia, Korea and Japan has dented the domestic industry’s fortunes and the sector’s share in the banking system’s stressed assets has gone up to 25 per cent.
  • NITI Aayog has called for a new policy to be drafted under guidance of govt thinktank that examines that entire value chain of the steel industry, from raw materials to taxation and logistics costs have hindered growth.
  • The steel sector had flourished between 2003-04 and 2007-08 and these golden years was the time when India grew at over 9 per cent and sustained this growth rate for three years, whereas the same dipped to 4.7 per cent in 2013-14 from 8.9 per cent in 2010-11.
  • Though the Centre had extended financial support to the sector earlier, but presently, the government is trying to support the industry through the RBI’s strategic debt restructuring scheme for the third time, irrespective of whether the scheme works or not.
  • Steel sector, which has a long gestation period, needs long-term finance like pension funds which have the capacity to withstand cyclical volatility of profits unlike funding from banks, external commercial borrowings or capital markets.
  • Though India’s steel production cost is about $320-$340 per tonne compared to $400 in China and the global average of $390, it is uncompetitive in global markets due to freight costs, higher credit costs, industrial power tariffs, high iron ore royalties, import duties and cess on coking coal.