India will be Number 2 steel producer surpassing Japan – Ms Aruna Sharma
First Post reported that at a time when the steel sector is grappling with not just low levels of demand, but also tough competition from its eastern neighbours like China, Japan and South Korea, steel secretary Ms Aruna Sharma says there is good news right around the corner. Sharma, who has been steel secretary for less than a year, is positive about one of the core sectors in the country which has a direct relation with industrial performance. She says in an interview to Firstpost that the government is waiting for quarterly steel production numbers to make the big announcement that India has surpassed Japan to become the number 2 steel producer in the world.
Edited excerpts from the conversation:
Q - Even though the cabinet last month cleared a policy to treble steel production by 2030, there isn't an equivalent increase in demand. Do you think it makes business sense to increase production at a time when demand is low?
A - We are consuming only 60 kg per capita, and any developing nation that wants to become a developed nation cannot afford to do that. Somehow, in the infrastructure sector, there have been alternate materials with low life-cycle cost. So now, we are focusing completely on enhancing the domestic demand. We had a GFR (general financial rules) amendment where the calculation of life cycle cost is now mandatory. We have also made it mandatory for all levels of government - Centre, states and its agencies to procure steel that has been Made in India.
Having said that, we had a five percent growth rate last year in domestic consumption, not very high but reasonably good. Our target is to reach 150 tonnes by 2022, from the current 85 million tonnes. When we reach 150 million tonnes, our consumption has to be 140 million tonnes. That gap has to be covered, but there is a big market. If you look at all bridges, crash barriers, buildings that are more steel intensive -- all of this will make a lot of difference as there is a huge gap that we have to cover. Across the globe they have gone for steel structures, as it is recyclable, zero maintenance and you get back the cost. That culture has to come to this country and that's where our focus is. We are educating the structural engineers and contractors so that demand will increase.
Q - PM Modi has given a call to 'go to the top' in terms of steel production in the country, and that means surpassing China. Do you think that's possible in the near future? And how?
A - China is the largest producer of steel, nearly 800 million tonnes and we are targeting to plateau at 300 million tonnes. We will then be number two. We are already number three. In fact, if you compare the figures of March, April, and May, we have surpassed Japan. We are just waiting to declare ourselves number two once we get the quarterly results or half-yearly results. But there will be a huge gap between number one and number two. There is no point in targeting 700 million tonnes. We will plateau at 300 million tonnes and definitely not less than that. The entire steel [industry] is saying that India is the bright spot. Most of the countries have plateaued but we will be on the growth trajectory. With 7 percent growth rate, steel demand is bound to go up. It has to go up. With this preferential procurement, we expect [to get] FDIs (foreign direct investments). Everyone will invest to make steel in India and there is no looking back. We will definitely achieve that.
Q - But dumping from China is also a concern.
A - We did some very focused targeted intervention. One was anti-dumping, which is completely WTO (World Trade Organisation) -compliant. We are not against imports. Imports are welcome, but dumping is not. That’s where we draw a line. We are focusing on bringing down the import costs. Productivity has to improve considerably, to which the industry has responded well. We are also enhancing domestic production. That will be the formula for success.
Q - A slew of measures like imposition of MIP (minimum import price), anti-dumping duty and safeguard duty have been imposed on cheap steel imports, but how long do you think we can continue with them especially since some countries like Japan have taken up the issue at the WTO?
A - Japan doesn't have a case in that because what we import from Japan is at a cost much above our benchmark rate of anti-dumping. MIP, which was a temporary measure, is zero now. Anti-dumping is WTO-compliant and the minimum rate which we have fixed and the quality of automobile steel which we are getting from Japan is much above that. So, they don't have to worry much. Now that we have extended anti-dumping for five years in 124 items, they are comfortable. We will encourage that more [so that] automobile steel gets manufactured in the country. Our tariff barriers are legal and correct as per international norms.
Q - Have we drafted a response to Japan's complaint? Have we submitted it at the WTO?
A - They (Japan) are aware about it. They have also seen the final order of the DG (director general) on anti-dumping on that and are comfortable with it. The case will continue. The arguments will continue, but there is no case for us to lose. A formal reply has been submitted at the WTO and it has recommended bilateral discussions. This is a quasi-judicial proceeding done through the DG.