India today said it will not lower its target for increasing steel manufacturing capacity to 124 million tonnes, although there is a slump in demand, noting that the "downturn is an opportunity" to expand.
"Actually the target is sustainable and our goal to achieve a production of 124 MT of steel (by 2011-12) is not too ambitious. It is practical, it is feasible, it is desirable," Steel Minister Virbhadra Singh told PTI in an interview.
The country's present steel capacity is 55 MT per annum.
On whether the proposed expansion would lead to glut in the market affecting bottomline of the steel firms, the Minister said: "...I am hopeful that in another two to three years time the world situation will definitely improve and demand will revive in the domestic market also".
Steel firms both in India and abroad are going slow on their expansion plans in view of the prevailing demand slump and liquidity crunch, a scenario which could hit the projected capacity.
Singh, however, said that recession should be taken as an opportunity, as the country could procure the services of global leaders in engineering and construction activities, that too cheaply, to set up the targeted production capacity in time.
"The recession worldwide may even help us in a way. People (engineering and construction firms) who are otherwise busy in expansion they will be available (as) expansion programmes are not taking place abroad due to recession," he said, adding that such firms would make domestic expansion projects "quick and cost effective."
Even as private counterparts find it difficult to finance their projects in the prevailing atmosphere, the minister said that the government-owned firms are comfortable to carry out the over Rs 70,000-crore expansion programme.
He said the funds would be made available through a mix of internal resources and market borrowings.
Steps would also be taken to cut the expansion cost by procuring cheaper equipment and engineering goods required in the augmentation process, he added.
He, however, made it clear that lowest bidder through tendering process would be given the contract. "We have also given a very strict instruction that single tender will not be entertained under normal circumstances."
Steel behemoth SAIL is spending about Rs 55,000 crore to almost double its capacity to 26 million tonnes from present 14 million tonnes by 2011-12. RINL would augment its production capacity to 6.2 million tonnes from present 3.2 million tonnes, while NMDC is in process of setting up a 3-MTPA plant in Chhattisgarh.
Among private players, Tata Steel will take its capacity to 10-MTPA from current 6.8-MTPA by 2011-12, while JSW Steel aims to achieve the same production capacity from 7.8 million tonnes at present. Essar Steel and JSPL are also working to expand their capacities.
Global steel majors like ArcelorMittal and Posco have also lined up multi-billion dollar investment to set up steel mills in India, however, they are awaiting regulatory approvals and their projects would not go on stream by 2011-12.
