The Hindu Business Line : Steel cos cautiously upbeat on NDA agenda

THE primary steel producers are cautiously upbeat over the National Democratic Alliance's agenda focus on the development of the steel industry, though there is a tinge of cynicism.

For, while capacity expansion will require infrastructural and fiscal support in a major way, the stress on high-value steel will enable the country to make proper use of its domestic resources like chrome, which is required for the production of alloy steel.

The `NDA Agenda for Development, Good Governance, Peace and Harmony' released by the Prime Minister, Mr Atal Bihari Vajpayee, on Thursday stated that policy and fiscal support would be provided for doubling steel production capacity in five years and improvement in technology for production of special and high-value steel.

According to Mr J. Mehra, Director, Essar Steel, to achieve the stated objectives, investments in coal and ore mines will be required not be only in India but also abroad because the country does not have certain varieties of coal required for steel production.

Also, the banking system and financial institutions should provide long-term funds at internationally competitive rates, he said.

The cheapest way would be to help the existing producers to expand capacities as they already have the required infrastructure. Besides, the infrastructure for logistics such as ports, the railways have to be put in place.

Regarding special and value-added steel, Mr Mehra said that since the country is endowed with good chrome reserves, it was always possible to produce alloy steels.

"We should be producing petroleum grade and automobile grade steel. We should be able to produce high-strength low-weight steel which are capable to withstand high pressure," he said.

According to a Tata Steel spokesman, infrastructure would be the key for continued improvement in steel capacity. "Entrepreneurs who will be investing in the new steel capacities should be assured that they will be able to bring in the raw materials and send the finished goods to the consumers. Are the railways geared up to the increased load?

Are the ports ready to handle the volumes and ensure speedy evacuation," he asked.

What would be required is to have more ports near the plants close to the sources of iron ore. This would help the producers to remain competitive, he said.

A spokesman of the Steel Authority of India Ltd (SAIL) said: "Steel is a sector that gets buoyant when the economy is buoyant. If the GDP grows at eight per cent or more, then steel has to grow at a higher rate than that. Simultaneously, infrastructure has to grow in accordance, along with demand from various sectors."

"We expect that by 2011-12, the country will have around 60 million tonnes of steel production capacity if not more, and for that, fiscal support will be correlated to the growth in the GDP," the SAIL spokesman said.