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NDA 2-year report card: Mixed bag for the steel sector

NDA 2-year report card: Mixed bag for the steel sector

Karthik Krishnan
moneycontrol.com

It has been a mixed bag for the Indian steel sector since the government came to power two years ago.

Production of total finished steel declined by 1.1 percent for FY16, while exports fell by a whopping 32 percent during the same period. In stark contrast, imports grew 20.2 percent, which hurt domestic industry.


The interesting metric was how steel consumption in India – which accelerated 4.3 percent – was led mostly by cheaper imports.

The culprit (no surprises here) was China. Local steel producers called for protectionism. And the government responded earlier this year with a double coating of levies — a minimum import price and safeguard duty.

Elsewhere, in an indication that industry was feeling the pinch, Tata Steel looked to sell its bleeding UK assets.


Amidst this gloom, there was a silver lining: India became the third largest producer of crude steel after China and the US with output for FY16 clocking in at 85.8 million tonnes. Key to the Ministry of Steel’s performance would be to keep this ranking by ramping up capacity.


A quick look into the ministry’s targets for the last two years revealed that projects by state-owned SAIL, RINL and NMDC — three PSUs under the control of the ministry of steel — fell behind their schedules. SAIL managed to finish 3 projects under this present government’s rule; NMDC completed as many with RINL only 2.

Positives:

India became the third largest producer of crude steel after China and the US with output for FY16 clocking in at 85.8 million tonnes.


Impose minimum import price and safeguard duty to protect local steel manufacturers

Negatives:


Production of total finished steel declined by 1.1 percent for FY16


Exports fell by a whopping 32 percent during the same period.


Revised targets for projects