Indian Steel Policy Curtails Foreign Steel Companies to Sell Products
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With the cabinet's approval of the policy for providing preference to domestically manufactured steel products on government procurement, foreign steel companies will find it increasingly difficult to sell their products in India unless they set up processing plants within the country.
However, those which are having processing plants capable of value-addition like Posco and ThyssenKrupp will be able to get a pie of the government procurement which roughly accounts for around 20% of the total steel consumption in India.
Aimed at encouraging promotion of India-made steel consumption so as to give domestic production a boost, the policy provides for a minimum value addition of 15% in notified steel products which are covered under preferential procurement.
This essentially means any foreign company willing to get a share of the government procurement will have to invariably do value addition in India to the imported raw material like hot-rolled coil or cold-rolled coil for making finished products.
This percentage will keep on increasing in sync with the rise in capability of Indian firms to produce such products. A committee, headed by steel secretary, will decide on the proportion of hike after assessing the ground reality from time to time.
The domestic steel industry, which has received a series of tariff and non-tariff measures from the government, will be at far more advantageous position with the preferential procurement policy. While it will ensure that more domestic steel goes into government procurement, imports of steel will also be less which would give them a huge pricing power.
However, there are provisions in the policy for waivers to all such procurements, where specific grades of steel are not manufactured in the country, or the quantities as per the demand of the project cannot be met through domestic sources.
The government believes that the policy would promote growth and development of domestic steel Industry and reduce the inclination to use, low-quality low-cost imported steel in government-funded projects.
