Thursday, January 04, 2007

Indian Steel Industry Gasping For Real Autonomy

For the steel industry, the New Year 2007 has brought a mixed bag of news. The good news - International Iron and steel Institute has informed that the global steel production during the year 2006 has been 1.21 billion tonnes registering a robust growth of 9.4% over the previous year. The other good news is that China continues to dominate as the largest steel manufacturer in the world with a production of 421.33 million tonnes and growth of 19.4%. Such growths globally and in individual nations including India is indicative of good demand for steel. It is expected that the market during the year 2007 will have a growth of 10% and thus give the industry some breather.
The bad news is for the Indian steel industry. Demonstrating a typical bureaucratic mindset, the government is reportedly contemplating to regulate steel prices for which a high level committee to monitor price movement has already started working. The industry which was languishing due to governmental controls were freed from the shackles only in 1991. There has been a surge for setting up new steel projects both by Indian investors and foreign giants like Posco and Arcelor-Mittal. This is in line with the National Steel Policy which has fixed a target of 110 million tonnes by 2019-20. But the present government's move to backtrack and reintroduce price control is going to affect the rapid growth of the steel industry which is the need of the hour for India's infrastructure development.
For reasons best known to the government, it has been flexing its muscles from time to time for imposing price controls. India and china both produced measly 2 million tonnes in 1950s. Today China produces the 421 million tonnes ten times the steel produced by India. It is the policy vacillations and lack of political will that have stifled India's steel industry. Remember in what pitiable state our civil aviation industry was before competition was permitted? Today airlines which offer minimum fare of rupees nine have turned corners in just 3 years.
Such are the dramatic changes that take place whenever governmental interference is withdrawn. But packing up existing authority and bringing new order is a far cry. If such stumbling blocks remain, India's steel production may not attain its target and it could slide down further from present level of a mere 10% of China's production. I just cannot accept such a pitiable scenario.

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