The Indian government is working on an initiative whereby lower rates of interest would be charged by financial institutions and lenders when extending borrowed capital to be deployed in capital-intensive green steel projects, government sources said on Monday, July 29.
Citing an example, the sources said that, if the rate of interest worked out at 10 percent for extending loans to any green steel project, the effective rate could be finalised a little lower. The option of the government subsidising the lower interest rate is also being explored, the sources said.
However, they added a caveat, stating that several ministerial clearances would be required and all financial institutions would be need to be brought on board before the scheme could be finalized.
It has been pointed out by the ministry of steel that, while a conventional steel mill of 1 million mt per year capacity would normally entail a capital investment of $1 billion, a similar capacity green steel mill would require an investment of $2-2.5 billion and would need some financial support in the form of interest subvention to make it attractive for investors, the sources said.
