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The steel stride

Union Minister of Steel Chaudhary Birender Singh is a seasoned politician and has dealt with rural India for decades. After taking over as the Union Minister of Steel about six months ago, he scripted a remarkable success story for the Indian Steel Industry, which was reeling under huge debts, shortage of demand, and rising imports. Chaudhary Birender Singh has now created a clear roadmap as well as a vision for future growth. In an exclusive interview with Resource Digest, he outlines his priorities & vision

What is your experience after taking over a new and different ministry?

When I took over as Steel Minister, I studied for 3 months about this ministry. The industry was going through a stress with more than Rs 3 lakh crore of loan, stressed loan you can say. We have done many things. Repayment of loans has started in last 2-3 months. Now, the loans are being re-adjusted or re-structured and banks have started getting installments.

It has been over six months since I took over as Steel Minister. I have met different stakeholders and visited steel plants and mines. I have come to the conclusion that steel industry is a vibrant and dynamic industry where employees work hard round the clock to produce steel which is the building block for a strong economy.

International linkages for raw materials and markets make the industry dependent on changing trends in world steel market.

Steel industry is important for the country because it has one of the highest economic linkages in overall GDP. Steel has an output-multiplier effect of around 1.4 times on GDP, so if steel industry grows by 1 per cent, its proportionate impact on GDP would be 1.4 per cent.

Employment-multiplier effect of steel is around 7 times, that is, with increase in output, steel industry has the potential to create 7 times the job opportunities, in upward and downward industries.

In 2016, India retained its position as the fastest growing major steel economy in the world. We are all proud of it, and we are confident that India would continue to lead the growth trend in world steel industry. All of us will have to work together for it.

What is your major priority?

In my view, there are five important thrust areas we need to focus on and to make it easy to remember, we have coined an acronym ‘PRIDE’ that aptly sums up the way forward for the steel industry.

P stands for production & productivity
R for Research & Development
I for Indian-made steel
D for Demand of Steel
E for excellence in quality

Each of these areas is important from the perspective of ‘Make in Steel’, which I understand as maximising usage of steel in different segments.

I would go one step further and add another element to the theme, which is ‘Why Steel’. We need to ask this question to ourselves and then convince the potential customers about the advantages of using steel. Our message will be clear when we are ourselves clear about what we want to achieve.

Steel industry needs to join the drive to demonstrate benefits of steel. Through Life Cycle Analysis, we need to showcase that steel structures are highly cost-effective and have shorter lead time for erection. Steel has greater durability with high design comfort.

At Ministry level, we have directed all concerned to utilize every possible opportunity to showcase prototypes and exhibits of steel for this purpose.

We must use all marketing, branding avenues to push this message. That is the only way to meet the challenge of product substitution by aluminium, concrete, plastic, glass, etc.

As far as the first letter P in PRIDE is concerned, India is on its way to become the world’s second largest steel producer.

The gap between India and Japan was 15 million tonnes in 2015, which has come down to 9 million tonnes in 2016.

India’s share in global steel production was 5.5 per cent in 2015, which has increased to 5.9 per cent in 2016. So as far as production of steel is concerned, we are on the right path.

In draft National Steel Policy that was put up in public domain recently, we aim to more than double the capacity to 300 million tonnes. That means an investment to the tune of Rs 10 lakh crore.

We definitely need to create demand in line with the planned increase in capacities. Our target is to increase per capita steel consumption to 160 kilogram.

We should work towards meeting the entire domestic demand of high-grade automotive steel, electrical steel and special steels from domestic production. These products constitute a major portion of the steel imports in India.

We are examining the feasibility of setting up scrap-based steel plants in India. These will be on the lines of ‘Melt & Manufacture’ steel technology in USA.

Scrap-based steel plants are environment-friendly, energy-efficient and cost-effective. These will have the capability to produce special high-quality steels, a pre-requisite for Make in Steel.

I would like you to deliberate on the cost-benefit analysis of setting up scrap-based steel plants in North and West India.

These regions are important from the perspective of scrap-availability and steel import hubs.

MSTC-Mahindra Intertrade state-of-the-art Auto Shredding Plant is likely to be functional in 2 years.

But is import a serious problem for the Indian industry?

Indian market has huge potential for auto-shredding. As per reports, there are more than 7 lakh cars and over 4 lakh trucks and buses which have reached end-of-life stage. By 2025, around 28 lakh cars and 12 lakh trucks and buses will reach their end-of-life stage.

India imports around 6 million tonnes of scrap steel every year and is the second largest importer of scrap after Turkey. By 2025, we will be able to generate 7.5 million tonnes of scrap every year.

So far as productivity is concerned, we are lagging behind the international benchmarks of performance. At country level, PSUs need to catch up with the productivity and efficiency levels achieved by private steel companies.

At international level, all Indian steel companies need to aim high and work towards achieving international levels.

What is your priority in R&D in the steel industry?

Research & Development (R&D) in Indian Steel industry is dismal. Whatever little R&D is being done is scattered and isolated. On the one hand, there is overlapping & duplication of research efforts, on the other hand, no research is being done on future requirements of the industry. We are happy and contented with token R&D here and there.

This is one industry where R&D is very important. R&D doesn’t mean that there can be something new in place of coking coal but if a new technology is available, it may increase the capacity of blast furnace.

To be competitive, I have strictly asked my ministry that we should set up a benchmark for the production not on the target. Benchmarking is on which level, cost wise, in the world market. For that, efficiency is a factor. Of course, there are other factors, which may not be in the hands of ministry.

I went to Luxembourg last year and was apprised that they are trying to explore mineral resources in space.

If a small country like Luxembourg can dream that big, what stops us from aiming high and working on out-of-the-box solutions and technologies for steel making using indigenous resources.

We are still dependent on imported raw material and high-end steel products. We have the potential to enhance usage of domestic coking coal by setting up more coal washeries.

We are capable of producing auto-grade, defence-grade and other special steels in India. What we need to do is to push ourselves and to come out of our comfort zones. Then only we can be self-sufficient and strong.

We are trying to bring together all R&D efforts under one umbrella of SRTMI (Steel Research & Technology Mission of India) with public-private partnership.

Ministry of Steel is in constant touch with different user ministries to ensure that steel-intensive structures are promoted through regulatory, advisory and other measures. We are in the process of talking to hill states to increase use of crash barriers to minimise fatalities due to road accidents on hills. Rural Development Ministry has already recommended use of steel-intensive structures in rural housing.

You have made a new initiative of ‘Indian Made Steel’.

We are trying that ‘Indian Made Steel’ can be defined in the light of existing Public Procurement Bill.

This will provide for mandatory procurement from domestic bidders on the grounds of promoting domestic industry. Basically, the aim is to emphasise lower life cycle costing while evaluating projects, rather than just looking at the upfront cost alone.

Demand of steel is most important factor from the ‘Make in Steel’ angle. There is no dearth of potential for steel demand. You name a core sector and steel is an integral part of it. The need of the hour is to channelise our resources in harnessing this demand.

What about steel demand?

At the Ministry level, we are constantly working on ways for increasing steel demand in India.

We had the meeting of newly-constituted Steel Consumer Council last month, in which concrete feedback has come from different stakeholders. We invited suggestions on increasing steel consumption in India on MyGov platform and the Ministry is working on implementable suggestions.

We have constituted four task forces and committees of experts and users of steel to formulate strategies to increase steel consumption in India.

The importance that we are giving to this area can be gauged from the fact that we discussed ways and means to increase steel demand in Parliamentary Consultative Committee and urged the members to use their good offices to propagate the message.

We all know that a record allocation of around Rs 4 lakh crore has been made for infrastructure sector in the recent budget.

Focus on areas such as ports, roads, affordable housing, physical infrastructure should provide the steel sector necessary impetus to meet its growth targets.

The budget has given infrastructure status to housing and enhanced budget for housing, which is expected to revive domestic steel demand as it will push up demand for construction grade steel particularly those for roofing purposes.

At present, around 60 per cent i.e. 50 MT of steel consumption is in construction and infrastructure sectors, and we want to continue with the same proportion in long-term also, thus increasing the steel consumption quantity in this sector to around 140 MT by 2030-31.

In the budget, the Government has waived basic custom duty on nickel and reduced custom duty on specific-use grades of hot rolled and cold rolled steel coils. The decision to cut down customs duty on LNG (liquefied natural gas) will boost domestic steel companies that rely on imports to run gas-based steel plants.

All these decisions will go a long way in ensuring that Make in Steel drive is successful in India.

Lastly, all these efforts will mean nothing, if we are not able to produce steel of high quality. If we want to compete at international level, we will have to perform as per international benchmarks of efficiency and quality.

It is my firm belief that Indian steel industry needs to move to a 100 per cent quality regime, for health and safety of end users. That is why we are going ahead with making BIS certification essential for most of the products.

I am sure steel industry will use PRIDE as the guiding principle for Make in Steel Roadmap for the industry.

Steel sector is one sector where suppose, you are creating the capacity but sometimes when dollar falls, the prices fall and steel company goes into loss making. That cycle of pricing…

That cycle is already there. But one thing is there, when I talk about benchmarking, benchmarking means I am an end-use customer. In my opinion, if one tonne of steel is produced, say if it is Rs 40,000 per tonne then the message goes to the end user. If it’s Rs 41,000 or 42,000 nothing wrong or if it is Rs 37,000 or Rs 38,000 nothing wrong in it. But if it is 26,000 or if it goes to Rs 57,000 then there is something wrong either with the industry or you are not protecting the interest of the consumer at the end. I want to move with this kind of bench marking.

Regarding NMDC plant of steel and its ownership?

The Chhattisgarh government has already written to PM about his concerns for this plant. On the other hand, the plant has to function first. In principle, a decision has already been taken by the Cabinet for disinvestment. That disinvestment is strategic.

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