The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged the Indian government to increase iron ore supply for the domestic steel industry which is currently running at all-time low capacity utilization levels. According to ASSOCHAM, such a move would bring down steel imports which are worth $6 billion annually, promote steel exports and curb India's ever-rising current account deficit.
A study by ASSOCHAM has indicated that iron ore exports totaling 100 million mt would earn India $10 billion, while the country would earn $8-9 billion through exports of just 10 million mt of steel, while value addition to the raw material would lead to employment generation, capacity building and various other benefits.
Highlighting that both steel demand and steel production is growing steadily, ASSOCHAM's study projects that India's steel production might reach 81 million mt in the current financial year as against 78 million mt in the financial year 2012-13. Considering that iron ore production in the country has been declining significantly, India is likely to witness a shortfall of about 30 million mt as domestic iron ore production is likely to stay at about 100-110 million mt in the current year and about 140 million mt of iron ore is required to produce 81 million mt of steel, as highlighted by the ASSOCHAM study.
ASSOCHAM also said that, with iron ore production in the country likely to drop, the production of fines is expected to total 60 million mt in the current financial year as against 88 million mt in the previous financial year and thus pellet and sinter plants will continue to operate below their rated capacities.
In view of the massive steel requirement for infrastructure development, there is a need to significantly ramp up steel production capacity in India which calls for urgent action on the aforesaid issues, ASSOCHAM said.