The government will procure 6.96 lakh tonnes of steel products from leading manufacturers such as SAIL and Tata Steel and then allot them to small scale industrial units to ensure availability of the materials for consuming firms.
These allocations will be made through State Small-Scale Industries Corporations (SSICs) and National Small Industries Corporations (NSICs).
"The government has decided to allocate 6,96,689 metric tonnes of iron and steel material to SSICs and NSICs for the year 2010-11," a government official said.
The government made it clear that requests for additional allocation would be considered only after the firms exhaust 50 per cent of the annual allocation, the official said.
To oversee distribution, it has already set up a small- scale industries coordination and review committee, comprising the joint secretary (steel) and secretaries and managing directors of SSICs of various states, besides the chairman and managing directors of NSICs and chiefs of producers such as SAIL, RINL and Tata Steel.
Fixing a 'nominal' Rs 550 a tonne as handling charges for SSICs and NISCs that supply steel products to the units, the government also warned them against selling the same to non- eligible categories.
"Under no circumstances shall SSICs/NSICs attempt to sell the materials to non-eligible categories... If deviation from this procedure is detected, the Ministry of Steel may direct JPC to discontinue the payment of handling charges, and supplies shall also be stopped," a letter to SSICs stated.
India had produced about 60 million tonnes of steel during the last fiscal.
The Steel Authority of India Ltd, Rashtriya Ispat Nigam Ltd and Tata Steel had together produced about 20 million tonnes of steel during 2009-10.
