'PLI, RoDTEP scheme will be a game changer for the Indian steel industry'

True that the pandemic had put temporary brakes on realty and infra projects, but a strong global demand for steel can already be seen. A surge in demand for steel from domestic buyers is also expected. Besides, the newly approved Production-linked Incentive (PLI) Scheme for speciality steel is turning out to be a major booster for ramping up production capacity by steel makers. However there still remain some pain points such as the ambiguity in duty structure and in iron ore production for example.

As the Union Budget day draws closer, speaking to Bizz Buzz exclusively, Satish Kumar Agarwal, Chairman and Managing Director, Kamdhenu Group, takes a 360 degree look on the Indian steel and speciality steel sector, and minces no word in saying that the 'PLI Scheme' and 'RoDTEP' will be a true game changer for the Indian steel industry. He also outlines industry's key expectations from the Union Budget

Why is steel industry so important for the country, if India is to reach its goal of becoming a $5 trillion economy by 2025?

The steel industry has been one of the major contributor towards India's growth primarily in infrastructure development. While the government is focusing to achieve a $5 trillion economy by fiscal 2025, steel industry's fortunes look optimistic, in the face of the recent instability caused due to the Covid-19 pandemic. Indian steel industry's contribution to GDP stands close to two per cent, while its diverse application across sectors makes it a harbinger of economic activity. As per National Steel Policy 2017, the Indian steel industry employs over 5 lakh people directly and close to 20 lakh indirect employment.

What about demand for and consumption of steel in India? Are they moving up sufficiently? Are there reasons to cheer about?

Infrastructure, as it is said, is the real 'Push Factor'. The nation is at present witnessing a transition towards economic stronghold stimulated by the national infrastructure pipeline comprising key initiatives like 'housing for all', smart cities, 'Bharatmala', 'Sagarmala', 'Udaan' (airports), freight corridors, high speed rail, metro rail, etc. These factors indicated a strong demand for steel at a CAGR of 7 per cent to 7.5 per cent from the current fiscal till 2025. The share of building and infrastructure construction alone in overall steel consumption is currently at pegged at 60-65 per cent.

It is said that the PLI scheme has huge investment potential. What is your take on this?

In sync with 'Make in India' policy to boost domestic manufacturing, the PLI scheme for manufacturing high grade specialty will further provide impetus and benefit both major integrated steel manufacturers as well as downstream manufacturing MSMEs in the sector. This will bring India at par with advanced steel making nations like South Korea and Japan and help plug the gap in market demand by domestic sourcing while creating products for exports. The PLI scheme has huge potential to attract further investment in the steel sector.

What are your views on the inclusion of steel in the Remission of Duties and Taxes on Export Products (RoDTEP) scheme? And what do you think would be crucial to increase competitiveness in the Indian steel industry?

At present, steel is outside the purview of 'The Remission of Duties and Taxes on Export Products (RoDTEP)' scheme that offers refunds against various embedded taxes to exporters across sectors such as automobiles and agricultural products. Recently India's trade ministry has pursued to extend an export promotion scheme to reimburse some local levies for domestic steel producers, which is a welcome step for the industry.

In order to increase the competitiveness in the Indian steel industry, it will be important to focus on cost reduction across the supply chain, efficiency in logistics and reduction in financing cost. Digitization along with strong emphasis towards sustainability will further provide value addition for the entire steel ecosystem. Every stakeholder's interest needs be addressed with focus towards higher productivity, higher quality, lower costs, better plant health, and the likes

With yet another Union Budget just round the corner, what would be your or steel industry's expectations from the Budget-2023?

The industry expects for removal of export duty levied earlier this year. The Russia-Ukraine conflict has opened the doors in the European market for Indian steelmakers, but the imposition of the export duty is deterrent factor. A revision of the export duty during the Budget 2023 will help the industry to tide away the inflationary pressure. This will be a welcome move for the industry as a whole for the reason that the industry players can tap the huge export potential.

All most 90 per cent of the demand for steel mill rolls in India are met through import with a 7.5 per cent customs duty being currently levied. This increases the cost of steel production also affects the competitiveness in the international markets. Assocham in its 'Pre Budget Memorandum' has recommended for full exemption of custom duty on steel mill rolls. If this is granted, it will benefit the industry immensely. Also a zero import duty on stainless steel scrap will go a long way in reducing the carbon footprint. Rationalization of import duty on stainless steel flat product will be a step in right direction towards 'Atmanirbhar Bharat' in stainless steel.