SUBSIDIES OR GOVERNMENT INITIATIVES:

1. INTRODUCTION:

India is the world’s third-largest producer of crude steel (up from eighth in 2003) and is expected
to become the second-largest producer. The steel sector in India contributes nearly two per cent
of the country’s gross domestic product (GDP) and employs over 6,00,000 people. The growth in
the Indian steel sector has been driven by domestic availability of raw materials such as iron ore
and cost-effective labour. Consequently, the steel sector has been a major contributor to India’s
manufacturing output. The Indian steel industry is very modern with state-of-the-art steel mills. It
has always strived for continuous modernisation and up-gradation of older plants and higher
energy efficiency levels. Presently, India’s crude steel capacity is around 126 Million Tonnes (MT)
and Production of crude steel was 97.4 MT during 2016-17.

2. INVESTING IN INDIAN STEEL SECTOR- MAKE IN INDIA

INITIATIVES:

The following are some of the major factors which will boost the demand of steel in India and
reasons to invest in Indian steel sector:

 The Union Cabinet has given its approval for National Steel Policy (NSP) 2017on 03.05.17. The new
Steel Policy enshrines the long term vision of the Government to give impetus to the steel sector.
It seeks to enhance domestic steel consumption and ensure high quality steel production and
create a technologically advanced and globally competitive steel industry. The policy projects crude
steel capacity of 300 million tonnes (MT), production of 255 MT and seeks to increase per capita
steel consumption to the level of 160 Kgs by 2030 from existing level of around 60 Kg and major
segments of consumptions are infrastructure, automobiles and housing sectors. The policy also
envisages to domestically meet the entire demand of high grade automotive steel, electrical steel,
special steels and alloys for strategic applications and increase domestic availability of washed
coking coal so as to reduce import dependence on coking coal from about 85% to around 65% by
2030-31.
 The Union Cabinet has also approved the policy for providing preference to domestically
manufactured iron & steel products on Government procurement. The policy provides preference
to Domestically Manufactured Iron & Steel Products (DM1&SP), in Government Procurement for
specified steel products having minimum value addition of 15%.
 Major projects of the Government of India like development of 100 Smart cities, Smart armed force
stations, Delhi Mumbai Industrial Corridor, development of ports, expansion of Railways, National
Solar Mission etc. are expected to increase demand of steel significantly in coming years.

3. INVESTMENTS IN STEEL SECTOR:

Some of the major investments in the Indian steel industry are as follows:

 Public sector mining giant National Mineral Development Corporation (NMDC) is setting up up a
greenfield 3-million tonne per annum steel mill in Karnataka at an estimated investment of Rs
15,525 crore (US$ 2.8 billion). Further investments have also been planned by NMDC in coming
years in view of requirement of Iron Ore for production of 300 MT steel by 2030.
 SAIL is currently expanding its hot metal capacity from 13 MTPA to 23 MTPA, at an investment of
around Rs. 72,000 crore.
 Government has planned Special Purpose Vehicles (SPVs) with four iron ore rich states i.e.,
Karnataka, Jharkhand, Orissa, and Chhattisgarh to set up steel plants having capacity between 3 to
6 MTPA.
 Posco Korea, the multinational Korean steel company, has signed an agreement with Shree Uttam
Steel and Power (part of Uttam Galva Group) to set up a steel plant at Satarda in Maharashtra.
 ArcelorMittal, world’s leading steel maker, has agreed a joint venture with Steel Authority of India
Ltd (SAIL) to set up an automotive steel manufacturing facility in India.
 JSW Steel has announced to add capacity to make its plant in Karnataka the largest at 20 MT by
2022.

EASE OF DOING BUSINESS

The followings policy initiatives have been taken by the Government after the liberalization to
enhance the availability of steel in the country

 Removing the steel sector from the list of industries reserved for public sector and opened for
private sector also.
 Exempting it from compulsory licensing.
 Imports of foreign technology as well as foreign direct investment are now freely permitted up to
certain limits under an automatic route.
 As a facilitator, the Government provides fiscal and other policy measures for the growth of steel
sector. Currently, basic excise duty for steel is set at 14% and there is no export duty on steel items.
The government has also imposed export duty of 30% on all forms of iron ore except low grade
(below Fe 58%) iron ore lump & fines. Further iron ore pellets have nil export duty.
 OTHER GOVERNMENT INITIATIVES:

 For ensuring raw material availability, the Government had issued Mines and Minerals
(Development and Regulation) Amendment Act, 2015 & rules there-under which provides for
allocation of iron ore to ‘specified end use’ to bring transparency in allocation of raw materials.
This would also allow transfer of captive mining leases, granted otherwise than through auction,
during mergers and acquisitions of companies and facilitate ease of doing business for companies
to improve profitability and decrease costs of the companies' dependent on supply of mineral ore
from captive leases. The transfer provisions will also facilitate banks and financial institutions to
liquidate stressed assets where a company or its captive mining lease is mortgaged.
 A Project Monitoring Group (PMG) has been constituted under the Cabinet Secretariat to fast track
various clearances/resolution of issues related to investments of Rs 1,000 crore (US$ 152 million)
or more.
 For reducing the stress in the steel sector, RBI has extended 5:25 scheme in July 2015, whereby
longer amortization period for loans to projects in infrastructure and core industries sectors, say
25 years, based on the economic life or concession period of the project, with periodic re-financing,
say every 5 years, is allowed.
 For ensuring quality of steel 53 items have been brought under quality control orders issued by
the Government. This will help in keeping away the production of inferior quality of steel in the
country.
 Ministry of Steel has constituted an Investment Facilitation Cell to provide necessary information
pertaining to steel sector, such as, policies of the Ministries, various incentive schemes and
opportunities available to make it convenient for investors to take investment decisions.