Steel policy to check price volatility

The government is likely to take steps to minimise risks arising out of price volatility in the steel sector and ensure adequate capital flow for mergers and acquisitions.

The steel policy, to be made public soon, is likely to announce the setting up of a nodal agency to train manpower and coordinate with technical institutes for necessary training.

A core group to encourage higher use of steel in large construction projects in the country will also be constituted soon, the policy is understood to have proposed.

The policy would also state that efforts would be made to ensure adequate flow of funds for modernisation and technological upgradation as well as consolidation of the existing capacity and mergers and acquisitions, highly-placed sources said.

They said the government would also affirm its commitment that there would be no shortage of funds with regard to financial closure of projects in the pipeline, as well as towards creation of new capacity.

They said the government, through the document, would articulate its support to developing financial instruments like futures and options to minimise the risks associated with price volatility.

Efforts will also be made to improve productivity by removing structural and institutional rigidities, which affect flow of capital in and out of the sector, according to the sources.

The policy will make a statement on the government's support to Indian steel exporters in fighting trade cases in overseas markets and appraise producers, especially small and medium units.

Reflecting a pro-export outlook, the steel ministry is understood to have proposed undertaking periodic detailed studies on the incentives, subsidies and promotional aids available to steel exporters of other countries.

The policy is likely to announce the government's decision to encourage and initiate multi-lateral and bilateral dialogue to boost regional trade and cooperation in steel, especially in steel-deficient neighbouring countries.

It will also frame appropriate fiscal and trade policies to ensure a level playing field for steel produced from re-rollable ship-breaking scrap and those from other producers.

The draft policy notes that following deregulation in the sector, the state's role is limited to being a catalyst for triggering domestic demand, or a facilitator for progressively removing the supply side constraints and that of coordinator to manage the external environment effectively.

Meanwhile, industry sources today said the recent cut in prices announced by the steel companies would not have a major impact on the bottomlines of any of the major companies during the second quarter of the current financial year.