Army to source steel from small-scale producers

The volatility in steel prices has forced the Indian Army to turn to smaller suppliers for its Rs 17,000-crore dwelling units project.

Approximately, 1,98,000 dwelling units under the married accommodation project (MAP), have been approved for construction for all the three services in the country.

Mathew Mammen, engineer-in-chief of the Indian Army, who was on a four-day visit to the city, said steel would be a predominant material for the construction of these dwelling units.

The MAP directorate was raised in May 2002 to make up for the huge deficiency of married accommodation in the defence forces.

According to him, the usage of steel in this major project would be to the tune of 10-15 per cent.

However, he said, the biggest problem with the steel industry is that the main suppliers could not decide on the prices.

Mammen said, "We have now identified smaller players who use the same technology like the big players and we will procure steel from them."

He also hinted at the big steel companies focusing on exporting their output to China.

In the Eastern Command region, 773 dwelling units will be constructed in Kolkata, 316 in Guwahati, 707 in Shillong and 428 in Gangtok. A total of 2,324 units would be constructed in a phased manner in the Eastern Command area.

Mammen said that the units in Kolkata will be multi-storied buildings and steel would be used heavily in these projects.

However, he clarified that the Indian's Army's project would not be affected due to rising steel prices.

The steel majors, who have been facing the heat from various quarters, argue that the demand-supply situation was a global function, which ultimately determined pricing.

The international market had started looking good and prices in the US, Europe and China had firmed up.

The steel industry was also confident that the demand in the domestic market would also pick up.

"If a 7-8 per cent growth rate is to be sustained then the focus will be on infrastructure and steel demand will increase."

The industry also pointed out that China, with a population of 1.3 billion, consumed 250 million tonne of steel, while India with a 1.1 billion population consumed only 36 million tonne.