‘SAIL will get good returns after its modernisation’

Steelmakers must earn profits to be able to fund growth. But at no time should they indulge in profiteering, Steel Secretary ARUNA SHARMA tells Kunal Bose. She says India is not against steel imports as long as dumping is not there. Edited excerpts:

Some steel-exporting countries are seeing India offering a lot of protection to the domestic industry by its liberal use of tariffs. Are we not perceived wrongly?

Whatever tariff measures, including antidumping duties, we have taken so far are all WTO-compliant and backed by extensive research. We are not against imports. But at the same time, we cannot allow our market to be swamped by foreign-origin subsidised steel products, denying local manufacturers a level playing field. We are committed to free trade in steel. That we export about 10 per cent of our production and import nearly nine per cent of our steel requirements is confirmation of that. The tariff regime for steel is to be calibrated in a way that the local industry doesn’t suffer due to steel products being dumped here at less than their production cost. The local industry has been given a major capacity growth target, and for the realisation of that it needs a shield against predatory imports.

Isn’t 300 million tonnes (mt) too ambitious a capacity target to be reached by 2030-31, considering difficulties in land acquisition and some global big boys having beaten a retreat on the issue of iron ore deposits ownership?

India remains the next big emerging giant in steel. We are on course to lifting our steel capacity from the present 126 mt to 151 mt by 2020. In the pursuit of the 2030 target, all three segments of our industry — the secondary sector, constituting 57 per cent of the industry, the integrated private sector, and public sector undertakings — will be participating in a major way. Big iron deposits favour steelmaking here. But mine ownership has to come through successful bidding at auctions, eliminating arbitrariness in deposit allocations. Hopefully, foreign investors will come to appreciate this approach. We need a big steel capacity, especially because a country targeting a sustainable high growth rate cannot remain infrastructure-deficit. In infrastructure projects, 40-50 per cent spending is on steel and the country has a very ambitious infrastructure development programme. As more such projects take off and the metal finds application in an increasingly bigger way in construction and automobiles, the environment becomes supportive to attain the capacity, production, and per capita use targets for 2030 in accordance with the new national steel policy.

India remains technology-deficient for the top end of steel production, making it perennially import-dependent in the case of some very high-value products. Are steps being taken for acquiring such technologies?

The goal is to create a truly technologically advanced and globally competitive steel industry. We are encouraging domestic producers to arm themselves with technology by way of collaboration with foreign steel majors to be able to produce high grades of automotive, electrical and special steels and alloys. The rapidly growing Indian automobile industry is becoming a more and more exciting demand centre for steel. It is contended that steel will be facing growing competition from aluminium and composites in the automotive sector. Earlier it was believed that the electric car body will be all-aluminium. But now Tesla is finding stainless steel good for electric vehicles. Technology breakthroughs, in the meantime, have allowed auto grade carbon steel to be light in weight but with high-tensile strength to fend off competition from aluminium.

Why do public sector steelmakers fare poorly in poor comparison to Tata Steel and JSW Steel in a buoyant market?

Yes, very efficient private sector producers have, at prevailing steel prices, achieved earnings before interest, taxes, depreciation, and amortisation (Ebitda) of around 18 per cent. As for Steel Authority of India (SAIL), it will be completing its massive modernisation and expansion next year and after that it will start getting good returns. SAIL’s investment will be directed at value addition. That will give its Ebitda a leg-up. Tata Steel and JSW Steel have been innovative in using the services of fabricators. This eco-friendly migration from timber to steel is a good example of last-mile connectivity.

Are consumers getting a fair deal at prevailing steel prices?

No one should grudge steelmakers earning profits. The government will be concerned if at any point they are found to be indulging in profiteering. As long as basic steel prices move in a range of ~35,000-40,000 a tonne, it’s a fair deal.

INDIA REMAINS THE NEXT BIG EMERGING GIANT IN STEEL. WE ARE ON COURSE TO LIFTING OUR STEEL CAPACITY FROM 126 MT TO 151 MT BY 2020