Despite many inherent disadvantages like higher transportation cost and high cost of capital, Indian steel industry is still very much competitive as compared to their peers and the country will continue to remain a great place to produce steel with some support from the government, Tata Steel Managing Director T V Narendran feels.
“At a very fundamental level what we are saying is India is a great country to produce steel as you have the raw materials and you also have the markets. There are of course some cost of manufacturing in India because of various infrastructure bottlenecks and some other things, he said.
“The cost of capital in India is also high, apart from the many advantages, but to me the biggest opportunity or the strength of India is the country’s market. Everybody wants to sell in India,” he said.
He, however, indicated that India’s advantage is getting negated to great extent because of rampant dumping of steel that is severely impacting domestic players who have invested more than $40 billion during the past five years in creating fresh capacities.
“If anyone wants to participate in the Indian market, they should come and invest in India and create jobs in India like what all of us are doing. Make steel in India as the country has raw material and also the market and compete with the rest of us, but if you allow free and easy market access, then there is no motivation for anyone to come and build a steel plant in India, which does not help India as a country,” Narendran said.
Seeking government intervention to help domestic steel players, he said, “We are only saying that when industry is going through a difficult time, the government has to keep this in mind because at the end of the day, building a steel plant is an expensive proposition.”
He pointed that companies like Tata Steel has spent over Rs 40,000 crore in the eastern region (Odisha and Jharkhand) in the last five years and it is the biggest investor in the eastern region having created huge number of jobs in eastern India.
But right now China has a problem and they want to sell steel in India, Japan has a problem and they want to sell steel in India and Korea has a problem and they want to sell steel in India, he said.
Narendran indicated, Indian steel makers might not have any problem with imported steel coming to India, but the problem is with the price at which the material is coming.
Chinese steel is coming to India not because Chinese steel makers are more competitive, but it is coming because they are dumping the product in India, he said.
“They are not making money at these prices. They are selling at these prices, but not making money. If they are making profits at these prices, then you can call them competitive, but if they are not making profit at these prices, how can you call them competitive," Narendran asked.
“So we are only saying that let us be fair to the Indian industry who has spent hundreds of thousands of crores. Not only Tata Steel, but SAIL, JSW and others have spent a lot of money. So let anyone come in India and invest, we have no problem. We can compete with anyone who comes from anywhere,” he said.
In India, the ministry of steel has said that India needs 300 million tons of steel in the next 10-15 years, he said.
“So we need investors to come and build that additional 200 million tons of capacity, which is $200 billion of money. So which investor will put $200 billion, if steel can come from anywhere,” he said.
“Indian steel companies are amongst the most competitive in the world. If you look at world steel association (WSA), CRU and other such publication which do the world cost curve, Indian steel companies are most competitive from the point of cost of production point of view, but if people want to sell below their cost of production, then obviously we will ask the government to look at it and take whatever steps are appropriate,” Narendran said.
Now whether it is safeguard duty, whether it is minimum import price, whether it is something else, that the government’s call, he said.
Citing an example and pressing the need for government help to support domestic steel industry, Narendra said if one looks at the industries that have grown in India like automobile industry, it will be clear that the growth would not have been possible if there was zero import duty on cars.
“I don’t know whether auto industry could have survived over the last 20 years, if there was zero import duty,” he said.
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