Seeking to smoothen the investment route in view of controversies pertaining mainly to land acquisition and mining space, the Centre has formed an Inter-Ministerial Group (IMG) to sort out contentious issues facing the steel industry by facilitating interaction between the investors and the agencies involved.
The IMG has been set up to facilitate interaction between investors and the various agencies in matters of acquisition of land, mining rights, power and transportation, including the rail, road and port sectors. Officials said as many as 222 memoranda of understanding (MoUs) had been signed between various companies and State governments so far for investing a staggering Rs. 11 lakh crore in the domestic steel sector to install an annual production capacity of 276 million tonnes. Several big ticket projects like that of ArcelorMittal and Posco have been facing inordinate delays on account of problems in acquiring land and other regulatory bottlenecks.
In spite of delays, steel production rose 7.1 per cent in the four years ended 2008-09, mainly as private entities continued to expand their operations.
The increase in production came on the back of capacity expansion, mainly in private sector plants and higher utilisation rates.
Among the domestic private companies, Tata Steel and JSW Steel augmented their production capacities to meet growing demand. The government plans to set up an annual steel production capacity of 120 million tonnes by 2011-12. The Economic Survey recently presented in Parliament, projected domestic steel consumption to grow in the range of 6-9 per cent in 2010 primarily on the back of improved demand from construction and automobile sectors.