By D K Aggarwal
The approval to the National Steel Policy 2017, which broadly focus on increasing
production and promoting domestic producers, is a boon to those steel companies which
had been losing money due to higher input cost amid weak realization.
It could be seen that even in 2016. The government had the taken a few protectionist steps for the domestic steel sector. To note, the
government had introduced an antidumping duty on some steel products from China and European countries and had also introduced
minimum import duty (MIP) on certain steel products for about a year to protect the domestic industry from cheaper imports and to
promote steel consumption in infrastructure and housing sectors at home.
In the recent Union Budget, the government has announced to spend Rs 3.96 lakh crore towards the development of infrastructure. With
the investment in residential construction, shipbuilding, defence, automobile and manufacturing sectors and railways, and also with the
initiatives such as Make in India, Creation of Smart Cities, housing for all, the sector is expected to see a turnround, going forward. The
government has been contributing a push to boost capacity, with upgrades at existing mills as well as stateowned companies building
new plants.
To note, the government continuous focus on infrastructureled growth and push to boost capacity would not only support the demand
growth of steel but at the same time would also help steel companies to achieve cost efficiencies.
Many steel companies have undertaken huge capacity expansion and are now waiting for revival and the approval of the National Steel
Policy 2017 is to support the growth of the companies.
In another development, government has decided to empower RBI to give faster approvals of loan restructuring. Actually swelling NPAs,
due to the nonpayment of loan particularly from power, steel, shipping and the textiles sector have infected the balance sheets of the
banking sector.
Meanwhile, the new policy aspires to achieve 300MT of steelmaking capacity by 2030 and to give preference to Domestically
Manufactured Iron & Steel Products (DMI & SP) in the government projects. As per the government this would translate into additional
investment of Rs. 10 lakh Crore by 203031.
To conclude, the approval to the National Steel Policy 2017 is expected to provide longterm direction to the sector and would also help
the bank to resolve the NPA issue (standing from the steel companies) and the companies such as Tata Steel, JSW Steel, Jindal Steel
and Power are likely to get huge boost.
(View expressed in this article are the author’s own and do not represent those of ETMarkets.com. Readers are requested to consult
their financial advisers before taking any positions based on these observations.)
Source: Economic Times