Mr Bhaskar Chatterjee, Secretary-General, Indian Steel Association, in the context of the forthcoming Budget talked about the consumption pattern, problems and solutions for the steel sector.
According to Mr Chatterjee:
• Steel consumption in key sectors is likely to grow by 7% and 7.2% during 2019 and 2020 respectively.
• In 2018, the Railways consumed 3% while the construction sector consumed 62% of the steel used in the country.
• The domestic industry has been able to meet most of the demand for the Railway and road sectors. Some steel requirement for these two projects are met by imports.
• The steel industry is facing difficult times due to non-availability of railway rakes. Freight charges for coal, limestone, minerals like manganese are lower than that for iron ore. This increases steel costs.
• The General Purpose Wagon Investment Scheme of the Railways needs to work on the issues such as return on investment, terminal access charges and empty wagon charges.
• Some of the steps to be taken by the government to improve the health of the domestic steel sector are:
• To levy safeguard duty on articles of iron and steel to protect against surging imports.
• exemption for steel products from the Regional Comprehensive Economic Partnership (RCEP).
• A review of Free Trade Agreements with respect to concessional duties
• to bring into operation the Steel Import Monitoring Agency
• The Centre should focus on uninterrupted supply of raw materials such as iron ore and coal for steel production.
• Bringing more steel products under the purview of steel and steel product quality control order/s to control import of sub-standard and defective steel to support the ‘Make in India’ initiative and aid the domestic sector.
According to different views by the experts, in the first Budget of the second term of the Government, the focus should be on the transport infrastructure, sustainability and growth. Transport infrastructure particularly road, to ensure safety for all users,
Infrastructure fuels economy in driving up the demand for materials including coal, steel and cement. It also creates jobs and has wider economic benefits for users.
The govt must also allocate more funds, push land reforms and bring clarity in its investment policies
Minister of road transport and highways Mr Nitin Gadkari said national highways building program Bharatmala will need funding of around Rs. 10 lakh crore owing to rising land acquisition costs. Around 65,000 kms of national highways are to be constructed under the Bharatmala Pariyojana.
Under the first phase, the National Highways Authority of India will build a total 34,800 kms of national highways by 2022. for the total project costing is going up to Rs 10 lakh crore.
Funding for the national highway projects may be raised from the overseas markets and TOT (Toll-Operate-Transfer) model.
According to a World Steel Association report, India’s crude steel production was 9.196 million tonnes in May 2019, up 5.1% over 8.753 million tonnes in May 2018.
As per the World Steel Association report, Global crude steel production for the 64 countries was 162.744 million tonnes in May 2019, registered an increase of 5.4% over 154.460 million tonnes in May 2018.
Other countries like China, Japan, US and Italy have shown mixed growth trends.
According to credit rating agency Crisil, the National Housing Bank’s (NHB) new framework for housing finance companies (HFCs) will structurally strengthen the sector and increase investor confidence at a time of liquidity stress among non-banks.
NHB recently announced the revised guidelines to boost housing sector with three key amendments:
The minimum Tier 1 capital adequacy to be maintained by HFCs has been increased to 10% from 6%, while the overall Capital Adequacy Ratio (CAR) requirement has been increased to 15% in a graded manner from 12% earlier.
The maximum leverage that HFCs can take up has been reduced to 12 times from 16 times over a period of three years.
The ceiling on the deposits that HFCs can mobilise has been lowered to three times of net-owned funds from five times.
The shipping ministry has drafted three sets of plans.
The long-term plan (five years) will focus on modernisation and capacity enhancement projects worth about Rs 1,500 crore to be implemented in the next five years.
The medium term (one year) projects will focus on port modernisation projects worth over Rs 800 crore to be implemented in the next one year.
The projects (100 days) that have the necessary regulatory approvals in place would be tendered in the next 100 days.
The National perspective plan of Sagarmala envisions the potential to save Rs. 21,000-27,000 crore through coastal shipping of 230-280 million tonnes per annum of key commodities such as Coal, Cement, Fertilisers, Iron and Steel, food grains and POL (petroleum, oil and lubricants) by 2025.