Union Finance Minister Arun Jaitley, on April 10, said the steel sector has started turning around as a result of the government measures initiated to protect domestic supplies from cheap imported Chinese steel but did not mention of any financial package to bail out the debt-ridden sector in the near term.
"The steel sector was suffering from the cheap Chinese steel coming in at below cost prices so we raised the custom duty, imposed the safeguard duty and the minimum import price. As a result of all the measures, the steel sector started turning around," he said when asked whether his ministry is planning any financial bailout package for the sector, during a press conference in Kolkata.
Earlier, it was reported that the government is readying a financial package to help revive the steel sector and also prevent bank loans advanced to steel firms from turning bad.
The steel and finance ministries are working on a package for the steel sector that will be finalised in the next two months, Steel Secretary Aruna Sundararajan was quoted as saying.
A number of options are being considered, including bringing in international investors to invest in domestic steel companies, Sundararajan had said.
Rating agency CRISIL Ltd estimates that the significant stress in the corporate loan book of the state-run banks could result in weak assets ballooning to Rs 7.1 trillion by March 31, 2017, or 11.3% of the total loan book, from around Rs 4 trillion as on March 31, 2015, or 7.2% of the loan book.
Imports of total finished steel was at 11.20 million tons in 2015-16, up 20.2% compared to the same period last year.
Imports in March 2016, at 0.994 mt, increased by 18.2% compared to March 2015 and 9.1% compared to February 2016. India was a net importer of total finished steel during fiscal 2015-16.
In February 2016, the government had imposed the minimum import price (MIP) condition on imports of 173 steel items covering all major flat and long steel products.
"The government in March 2016 extended the safeguard duty on hot rolled coil (a steel product) imports that was placed in September 2015, till March 2018," said a steel ministry report.
However, the duty would be reduced to 10% in stages over the next two years, it said.
The report said cumulative impact of these two recent and other existing policy measures would lead to further reduction in imports into the country in the coming days.