The high logistics costs, along with interest rates, prove to be the major factors making the Indian steel industry uncompetitive to cheap imports from China or Korea, Ravi Uppal, CEO and MD, JSPL told ISMW.
“The Chinese today (are) supported by their government incentives and very low interest rates. Their cost of production is much less and their export price of steel is such that we cannot think of. They get, for example, 13-15% of export incentive from the government for any steel that they export. We don’t get those kinds of sops,” Uppal said.
Apart from incentives and interests, he said logistics costs are a major drawback for domestic manufacturers.
“Our internal logistics costs are very high. For example, if I have to move a ton of material from, say, Angul to Mumbai, it costs me Rs 3,500 per ton. But if I bring say, from Shanghai, one ton of steel to the Mumbai port, it costs me only $14 which means a mere Rs 900 per ton. So you can imagine, if logistics alone can make so much of a difference, who will reach the Mumbai market easily? I think, Chinese or Koreans can reach them easily compared to domestic producers, most of whom are located in the eastern or south-eastern part of the country, ie, Jharkhand, Chhattisgarh, West Bengal and Odisha,” he said.
“I gave you the example to drive home the point that we have some intrinsic handicaps in competitiveness,” he added.
ISMW