Foreign steel mills will have the option of setting up processing units in India and competing for supplies to government projects where use of domestic steel has been made mandatory, an official at India’s Ministry of Steel said on Friday, May 26.
The ministry official said that, as long as there is a minimum value addition of 15 percent within the country to imported steel, it will be eligible to bid for supplies to government projects, just like steel produced by domestic steel mills.
According to the official, a large volume of steel imported into the country needed to be customized and processed by end-users or local steel processing units and what is required under the new policy is that such customization and processing is done within the country by foreign steel companies exporting to India.
The steel ministry official said that this norm applicable for overseas steel exporters is very much in line with the policy laid down for domestic steel producers whereby the latter have been directed to rapidly increase their product portfolio of value-added steel rather than just continuing to increase their production capacity of crude steel.
In the assessment of the steel ministry, the contradiction of excess capacity and supply constraints at the same time is largely owing to the mismatch of product portfolios to cater to key sectors like automobile and consumer products, the official said, adding that production of just crude steel is not enough.
Hence, the new steel policy maintains a window of continued steel imports with the pre-condition of domestic value addition which would align product mismatches in the domestic steel markets, he added.