Saddled with the ambitious target of achieving 300 million tonnes production by 2025, the Steel Ministry has sought infrastructure sector status for the industry, as this would help in facilitating faster environmental clearances, smoother facilitation of funds and greater availability of raw material for projects.
According to highly placed sources, the Steel Ministry has requested the Finance Ministry to consider the request urgently as by the end of the 12th Plan period the Government plans to take domestic steel production to 142.3 million tonnes. As per official data, domestic steel production stood at 72 million tonnes in the country in 2011-12 and India was at the fourth position globally behind China (684 million tonnes), Japan (108 million tonnes) and the USA (86.4 million tonnes).
Sources said that the by the end of the ongoing 12th Plan period, manufacturing capacity of the steel sector is expected to grow from 8 per cent to 12 per cent, and in order to achieve this ambitious target it is essential that the industry is given the infrastructure sector status at par with the power, oil and highways sectors.
Doing so, they added, will help expediting various factors like land clearances, funds as well as raw material availability for its ambitious projects. This in turn will make it easier for the Government to achieve the 12th Plan period production target (142.3 million tonnes), and will also help in paving the way for achieving the target of 300 million tonnes by the year 2025.
In terms of availability of funds, if the steel industry gets the infrastructure sector status, it will translate into higher exposure limits from financial institutions and could even translate into tax exemption limits, at par with other high priority or big ticket projects, industry sources said. Apart from this, the status will also ensure that projects within the sector are granted single window clearance and are not held back due to top priority given to oil, power or road projects.
During the tenure of the UPA Government, there were speculations that the steel industry could be granted the infrastructure sector status, however there was no movement in this regard at that time. Now, sources pointed out, the Steel Ministry has sent the proposal to the Finance Ministry, encouraged mainly by the fact that Prime Minister Narendra Modi’s known enthusiasm towards greater private investment in the country.
With the NDA Government keen on promoting the public private partnership (PPP) mode, the steel sector will gain significantly, if the infrastructure sector is granted to it. The country’s biggest Greenfield project - the 12 million tonnes capacity steel plant in Odisha by South Korean steel major POSCO - is yet to take off despite being envisaged in 2005 owing to various factors, local as well as policy centric.
In this scenario, if the steel sector gets the infrastructure tag, then in future such projects may not get delayed or get side-tracked, though industry watchers said that it would be interesting to know whether the Government alters the domestic production target of 300 million tonnes for 2025 and pegs it a few notches higher.