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Updated: September 4, 2013 23:04 IST

Special purpose vehicle for steel industry sought

Special Correspondent
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C.S. Verma
C.S. Verma

Industry needs $200 b investment to treble capacity to 300 million tonnes

Pressing for the need to step up domestic manufacturing of equipment required by steel plants, a move that could save $120 billion in foreign exchange, Steel Authority of India Limited (SAIL) Chairman C. S. Verma said the country needed to invest around $200 billion to treble its steel-making capacity to 300 million tonnes per annum (mtpa). Mr. Verma also impressed upon the Steel Ministry to float an entity or special purpose vehicle (SPV) on the lines of Power Finance Corporation (PFC) to fund such projects.

“The Ministry should also facilitate setting up of manufacturing units for equipment required in steel plants and reduce dependence on imports of such items, which may save $120 billion in forex outflows for adding this additional capacity”. At present, India’s steel production stands at 90 mtpa.

High-level panel

A high-level committee, headed by Prime Minister Manmohan Singh recently drew a roadmap for taking the capacity to 300 mtpa by 2025-26. “The 200 million tonnes increase in steel capacity on an incremental basis would require huge capital investments, almost about $200 billion at about $1 billion per million tonne of capacity,” Mr. Verma said at the Steel Summit organised by Confederation of India Industry (CII) here.

Thrust on manufacturing

The SAIL chief said “to reduce these costs, the Indian steel industry should give thrust to setting up world-class equipment manufacturing facilities and promote indigenisation of supplies of mechanical or electrical equipment’’.

Rashtriya Ispat Nigam Chairman and Managing Director A. P. Choudhary pitched for allocating captive iron ore mines to the steel industry or creating a policy which would support low-price regime.

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