In a written reply in the Lok Sabha on March 15, Union Minister Dharmendra Pradhan said that National Steel Policy enshrines the long term vision of the government to give impetus to the steel sector.

The policy envisages to create a technologically advanced and globally competitive steel industry that promotes self-sufficiency in steel production as well as economic growth. 

Steel being a deregulated sector, the government acts as a facilitator, by creating an enabling environment for development of the steel sector.  

Pradhan also listed various initiatives taken by the government.

Indian steel sector

At the time of independence in 1947, India had only three steel plants – the Tata Iron & Steel Company, the Indian Iron and Steel Company and Visvesvaraya Iron & Steel Ltd and a few electric arc furnace-based plants. The period till 1947 thus witnessed a small but viable steel industry in the country, which operated with a capacity of about 1 Million Tonnes and was completely in the private sector. 

The provisions of the economic policy implemented underwent marked changes in Indian steel industry. From the fledgling 1 Million Tonnes capacity status at the time of Independence, India has now risen to be the second largest crude steel producer in the world and the largest producer of sponge iron. From a negligible global presence, the Indian steel industry is now globally acknowledged for its product quality.

The Indian steel sector has grown exponentially over the past few years, contributing to about 2 per cent of the country’s GDP and employing over five lakh people directly and about 20 lakh people indirectly.

The rapid pace of growth of the industry and the observed market trends called for certain guidelines and framework. Thus, was born the concept of the National Steel Policy, with the aim to provide a roadmap of growth and development for the Indian steel industry. 

The National Steel Policy (NSP), 2005 was announced in November 2005 as a basic blueprint for the growth of a self-reliant and globally competitive steel sector. The long-term objective of the National Steel Policy 2005 was to ensure that India has a modern and efficient steel industry of world standards, catering to diversified steel demand. The focus of the policy was to attain levels of global competitiveness in terms of global benchmarks of efficiency and productivity. 

Then, after a detailed review in 2017, the government released the National Steel Policy 2017, which has laid down the broad roadmap for encouraging long term growth for the Indian steel industry, both on demand and supply sides, by 2030-31, with a vision to create a technologically advanced and globally competitive steel industry that promotes economic growth.

At the same time, as a facilitator in the present day deregulated, liberalised economic/market scenario, the government has also announced a policy for providing preference to domestically manufactured iron & steel products in government procurement. This policy seeks to accomplish the vision of ‘Make in India’ with the objective of nation building and to encourage domestic manufacturing.

National Steel Policy

The National Steel Policy - 2017 envisages creation of 300 MT of steel capacity in the country by 2030-31 as against existing capacity of 138 MT. The estimated import of plant and equipment, for reaching 300 MT capacity, will be around Rs 1,72,550 crore. Further, it is estimated that at 300 MT capacity level, India will have to spend about Rs 3,450 crore annually for import of proprietary and other spares.

NSP 2017 aims to increase focus on expansion of MSME sector, improve raw material security, enhance R&D activities, reduce import dependency and cost of production, and thus develop a “technologically advanced and globally competitive steel industry that promotes economic growth” eyeing self-sufficiency in production, developing globally economical steel manufacturing capabilities by facilitating investments and cost efficient productions with adequate availability of raw materials.

With focus on R&D through establishment like Steel Research Technology Mission of India (SRTMI), the technology would be of utmost focus over the next decade and MSME steel plants would be the key drivers to achieve the additional capacity required for the India’s consumption led growth and improvement in the overall productivity and quality.

The policy also envisages to domestically meet the entire demand of high grade automotive steel, electrical steel, special steels and alloys for strategic applications and increase domestic availability of washed coking coal so as to reduce import dependence on coking coal from about 85 per cent to around 65 per cent by 2030-31.

NSP 2017 has set ambitious targets with regard to making Indian steel globally competitive, to reduce carbon footprint, meeting domestic demand for high performance steel, increasing steel consumption etc. To achieve these targets, the NSP 2017 has identified high end research as one of the focus areas.

Various initiatives by the govt to boost the sector

1) Domestically Manufactured Iron & Steel Products (DMI&SP) Policy 

• The government introduced DMI&SP Policy on May 8, 2017 to provide preference to domestically produced iron & steel materials in government tenders. The policy was revised in 2019 and it expanded the list of manufactured products to 49 from the previous 11 items.

• In line with the government’s vision of ‘Aatmanirbhar Bharat’, the ministry of steel in December 2020 notified amendments/additions to the policy. It mandates procurement of only domestic steel for projects exceeding Rs 5 lakh in value. 

• Domestic steel has been defined as one which has been manufactured in India and has domestic value addition ranging from 15-50 per cent. Engineering, procurement, and construction (EPC) contracts have also been covered under the revised policy. 

• DMI&SP policy has so far led to import substitution of more than Rs 21,000 crore worth of steel, which implies that more domestic steel is being used in government procurement, thereby creating more job opportunities in the country apart from strengthening the economy.

2) Steel Scrap Policy

• In a bid to enhance the availability of domestically generated scrap, the government came out with a Steel Scrap Recycling Policy in 2019 that aims to reduce imports, conserve resources and save energy.

• The policy provides a framework to facilitate and promote establishment of metal scrapping centres in India for scientific processing & recycling of ferrous scrap generated from various sources and a variety of products. 

• The policy framework provides standard guidelines for collection, dismantling and shredding activities in an organised, safe and environmentally sound manner. 

• It prescribes the guidelines for setting up and responsibilities of dismantling centre and scrap processing centre, roles of aggregators and responsibilities of the government, manufacturer and owner.

• Operating on the 4+1 hub and spoke model, where four collection and dismantling centres are to cater to one scrap processing centre, then 400 jobs would be created by one such composite unit. And for 70 units producing a total of 7 MT of scrap the potential for employment generation would be of 2,800 persons. If the country was to produce 70 MT, as expected as per NSP 2017, the employment generation could be in the range of three lakh jobs.

3) Issuance of Steel Quality Control Order

• To promote quality steel production by the steel industry, the ministry has made adoption of BIS Standards mandatory through regulations known as Quality Control Order. The Quality Control Order facilitates supply of quality steel for critical end-use applications such as infrastructure, construction, housing, engineering sector, etc and also the public at large. 

• The Quality Control Order prohibits import, sale and distribution of substandard steel and steel products. 

• The ministry of steel has notified the Steel Quality Control Order 2019 on July 22, 2019 to include 13 additional steel products standards to take the overall steel products standards covered under Quality Control Order to 66. 

4) Steel Import Monitoring System (SIMS)

• A Steel Import Monitoring System (SIMS) has been operational from November 1, 2019 in the lines of Steel Import Monitoring & Analysis (SIMA) in the US. 

• SIMS requires the importer to submit advance information online for import wherein they get an automatic registration number for carrying out imports. 

• SIMS has proved to be useful to Indian domestic steel industry by providing steel import data in advance containing information on exact grade of steel, end use, adherence to Indian Standards, etc. 

• SIMS data is making it possible for the Indian steel industry to respond to the market conditions in a more dynamic manner and is a step towards import substitution.

5) Engagement with various stakeholders

• The Indian steel sector is a diverse and vibrant ecosystem comprising a multitude of stakeholders across the value chain. Each stakeholder brings valuable inputs to the sector based on their rich experience. 

• In order to leverage these experiences and ensure efficient operationalisation of the envisioned initiatives, the ministry regularly facilitates interaction with the various stakeholders. 

• Brainstorming sessions are organised as a collaborative platform to bring together all stakeholders of the Indian steel industry to address challenges, identify opportunities and arrive at tangible outcomes to steer the Indian steel industry on the path of sustainable growth. 

• The ministry also holds talks with stakeholders including those from the ministry/department of railways, defence, petroleum and natural gas, housing, civil aviation, road transport and highways, agriculture and rural development sectors to enhance the overall demand for steel in the country.

6) Inclusion of ‘specialty steel’ under PLI Scheme 

• Although India is a net exporter of finished steel in terms of quantity, it remains a net importer of ‘specialty steel’ owing to limited production capacity for steel grades such as high strength steel, electrogalvanized steel, heat-treated steel, asymmetrical rails, bearing steel, valve steel, tool & die steel, etc. 

• In order to incentivise production of such ‘specialty steel’ grades, the Union Cabinet on November 11, 2020 approved the Production Linked Incentive (PLI) Scheme for specialty steel grades. 

• It is envisaged that the PLI scheme shall boost the production of identified specialty steel grades from the current 16 MTPA to over 37 MTPA in five years, while attracting investments of over Rs 35,000 crore. 

• This would not only result in an overall contribution to achieving the $5 trillion economy, but would directly boost employment in the country owing to the huge multiplier effect of steel.

7) Signing of deal between India and Japan

• Indian and Japan signed a memorandum of cooperation in the field of steel industry on December 22, 2020. It aims to promote the development of cooperation in steel sector between two countries through joint activities under the framework of India-Japan Steel Dialogue. 

• The activities will cover several areas of mutual interest including trade and investment, capacity building, sharing of experiences and best practices in steel uses and workplace safety and energy efficiency cooperation. 

8) Various other schemes

The government notifies various schemes from time to time to refund or exempt taxes and duties levied on inputs used in export production like Duty Drawback Scheme and Advanced Authorization Scheme to improve the cost competitiveness of exported items.

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