core sector communique

India to be 2nd Largest Steel Producer by 2013: Shri Beni Prasad Verma


The Union Minister for Steel, Shri Beni Prasad Verma said that India will become the world's second largest producer of steel by 2013. With an installed annual production capacity of 120 million tonnes up from the present the present 80 million tonnes. Addressing the 5th India steel Summit in New Delhi today, he said that currently, India has the fourth largest steel sector in the world, both in terms of capacity and production. He said, further the capacity is expected to be over 150 million tonnes by 2020.

On the occasion, the Steel Secretary, Shri P K Misra said that by the end of the current financial year, the steel manufacturing capacity of the country might reach around 90 MT. He said, this is likely to cross 110 MT by next financial year when the brownfield capacity addition projects of SAIL and other private sector projects get commissioned.

The secretary also called upon the steel industry to come forward for expansion in Research & Development and infrastructure development specially of port and railways. Shri Misra said that the industry and the technologists to seriously consider and prioritize innovation, research design and manufacturing activities in the steel technology area.

Shri Misra said, considering the many challenges, the industry faces at present; Ministry of Steel has decided to formulate a New National Policy and vision Document on Steel sector. This will project a medium term horizon of 10 years and also a long term vision of 25 years. Four eminent personalities in the related fields have offered their services to head the Task Force committees. The various Committees have already started functioning with wide interactions and consultations with the stakeholders and the industry. The report is expected to be ready by December this year, said the Secretary.

Following is the text of the speech made by the Minister of Steel, Shri Beni Prasad Verma on the occasion:

“I am indeed happy to be present on the occasion of ‘Fifth India Steel Summit’ organised by the Associated Chamber of Commerce & Industry. The Conference has come at a right moment when Indian Steel Sector is passing through an important phase, where it needs to address key issues relating to capacity enhancement, value creation and competitiveness.

Currently, India has the fourth largest steel sector in the world, both in terms of capacity and production. By 2013, India will be the second largest steel producer in the world riding on the high levels of growth in construction, housing, real estate, automobiles and agriculture. Currently, steel demand in the country is growing at an average rate of 10%, which may exceed even 12% in near future. In order to meet the demand from domestic consumers, steel production capacity in India must increase at average rate of 10 to15%. We have, therefore a challenging task ahead of us in setting up the desired capacities, within the shortest possible time.

As you may be aware, the progress of steel projects also depends upon allocation of raw material resources, land, water, environmental & forest clearances as well as development of infrastructure. There is also the issue of delay in iron ore mining lease to major steel producers, many of whom have no captive source of raw materials. I hope the Conference will deliberate on these key issues affecting investment and suggest a way regarding how Investors and the Government can expedite steel investment.

India is endowed with significant iron ore reserves, estimated at 25 Billion tonne. However, the proven economically mineable reserve is only 7 billion tonne, of which the high reserve grade is only 1.3 billion tonne. Considering we will be producing more than 200 million tonnes of steel in another 10 years, there is an urgent need to conserve our scarce natural resources. As a matter of policy we have taken fiscal measures in imposing 20% duty on export of all kinds of iron ore. This is expected to encourage domestic value addition in the country. Also in order to encourage better utilization of iron ores fines, export duty on Pellets has been exempted in the last budget.

There are a large number of projects currently in the pipeline including the major ones such as expansion plan of SAIL, RINL, Tata, Essar, JSW and JSPL. A number of greenfield projects are also at different stages of progress including the large foreign investment projects such as Posco and Arcellor-Mittal. I have been told that, the brownfield projects are progressing well, whereas some of the greenfield projects are lagging behind their schedules by 2 to3 years period. My Ministry is closely monitoring the major steel investment projects. The progress of public sector steel units is also being closely monitored by the Ministry. By the year 2013, it is estimated that Indian would have a steel production capacity of 120 million tonnes, up from the present 80 million tonnes. Further the capacity is expected to be over 150 million tonnes by 2020.

Land Acquisition has become a major challenge. Steel investors need thousands of acres of land for setting up their projects. India is a thickly populated country. Most of the people in rural areas are largely dependent upon agricultural land for maintaining their livelihood. Acquisition of land without ensuring adequate compensation, rehabilitation and employment, has already generated massive unrest and protests, in various parts of the country. However, land is also essential for any industrial development activity. To maintain the fine balance, Government is seriously working on a new Land Acquisition and Rehabilitation Bill. I hope this will be finalized very soon.

Steel projects and the mining activities are usually located in relatively underdeveloped regions of the country. The industry has a responsibility for looking after the needs of the local population and act as a facilitator for social development. Corporate Social Responsibility (CSR) assumes a significant role in this area. All profitable public sector companies under my Ministry have made commitments to the cause of CSR and have earmarked at least 2% of their distributable surplus for CSR activities focusing on environment, family welfare, education, health, water supply and sanitation. I also request the private sector to take a massive lead in this direction.

Steel consumption in India is around 50 Kilograms per person per year. A large section of rural India does not have good distribution network to avail the steel products. Rural steel consumption in the country is only 10 Kilograms per person. Various government social schemes like NREGA and Indira Awas Yojana are expected to bring about development in the rural areas and increase steel consumption. In addition I have also directed the Public sector steel units to increase their distribution network in rural and remote areas of the country.

I understand that the National Summit will be addressed by eminent persons from the industry as well as representatives from some of the State Government. I request the participants and delegates to focus upon the key issues affecting growth and development of Indian steel industry into a world leader and in achieving long term sustainability. I wish the Conference all success”.