Indian Minister for Steel, Chemicals and Fertilizers, Shri Ram Vilas Paswan, has urged the Indian steel industry to continue to support the efforts of the government to control the inflationary trend in the country.
Concerned about the rise in raw material prices, the minister has called on the steel industry to ensure that profit levels are not disproportionate to the rise in production costs and to choose a point of balance between the needs of consumers and steelmakers' prices.
In order to help reduce production costs, the Indian government has cut excise duty by two percent in its budget, has removed the import duty on scrap and has imposed a 15 percent ad valorem duty on iron ore exports. Moreover, 44 percent of steel produced in India is from captive iron ore mine supplies; the cost of captive iron ore in proportion to the cost of steel production is only five percent, compared to over 30 percent for producers depending upon the spot market for their requirements of iron ore.
In addition, Shri Ram Vilas Paswan said that by 2015 the Indian steel industry can be the third largest in the world and, in order to implement expansion programs in a time bound manner, the ministry is monitoring the major steel investment projects for which it has created an Inter Ministerial Group (IMG). Furthermore, the minister stated that by the year 2012 it is estimated that India will have a steel production capacity of 124 million mt per year from the current level of 59 million mt and that, taking into account the investments in pipelines, by 2020 the country's steel production capacity will increase to 300 million mt per year.
The minister emphasized also that such massive investments in the steel sector will involve some issues to be sorted out. Thus, the steel industry is to be responsible for raw material resources, land, water, the environment and forest clearances, as sell as for the development of a huge infrastructure.