Steel sector investments seen at Rs 75000cr

The Indian steel industry could see an investment of over Rs 75,000 crore over the next 7-8 years to increase its capacity to 60 million tonne, Moosa Raza, president of Indian Steel Alliance (ISA), said.

While the country's largest steel maker - the Steel Authority of India Ltd (SAIL) - has already announced an expansion plan of Rs 25,000 crore spread over the next 8 years, The Rashtriya Ispat Nigam has also outlined an expansion plan entailing an investment of around Rs 18,000 crore.

Private sector steel behemoths such as Tata Steel, Jindal Iron & Steel Company and Essar Steel have also announced expansions projects for the next few years. An estimated investment of more than Rs 30,000 crore is expected to be made between them in the next 5-6 years.

A senior industry official said, "With most of the primary producers expanding their capacity and an overall strong demand growth, the secondary and downstream producers will also be ramping up capacities and we could see a lot of investments at this level."

Backward integration for assured supplies of raw materials such as iron ore and coal will also lead to substantial investments, he added.

A steel sector analyst said, "While steel companies will be able to support most of the investments through their internal cash generation, lending to the sector will also increase in the coming years."

ISA also said that a further reduction in import duty on steel would make the domestic companies more vulnerable and dampen the enthusiasm of entrepreneurs to invest in the industry in the long run.

"Customs duty on steel has already reached rock bottom levels. Any further reduction of customs duty therefore will not benefit the consumer, but will send out a negative message to the stakeholders in the steel industry and affect its growth," Raza said.