Niti Aayog moots independent regulators for steel, mines sector

The premier policy-making body has also pitched for a new and dynamic steel policy to bring the over USD 100 billion industry back on track as well as meet the target of 300 million tonnes (mt) capacity by 2025.
  • Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
GeStepAhead GrowMyMoney IThe Winning Leap SME Special
Moneycontrol

Home » News » Economy

Oct 18, 2016, 03.03 PM | Source: PTI

Niti Aayog moots independent regulators for steel, mines sector

The premier policy-making body has also pitched for a new and dynamic steel policy to bring the over USD 100 billion industry back on track as well as meet the target of 300 million tonnes (mt) capacity by 2025.

Like this story, share it with millions of investors on M3

Niti Aayog moots independent regulators for steel, mines sector

The premier policy-making body has also pitched for a new and dynamic steel policy to bring the over USD 100 billion industry back on track as well as meet the target of 300 million tonnes (mt) capacity by 2025.

Post Your Comments

Share Cancel

Niti Aayog moots independent regulators for steel, mines sector
Government think-tank Niti Aayog has favoured creating independent regulators for steel and mining sectors in the country in a bid to make both industries profitable.

The premier policy-making body has also pitched for a new and dynamic steel policy to bring the over USD 100 billion industry back on track as well as meet the target of 300 million tonnes (mt) capacity by 2025.

"Since steel is a deregulated sector, there is need for an independent regulator for effective regulation, which the sector presently lacks," Aayog said in a working paper.

"Also, in the mining sector, though NMDC should act as a regulator, it itself is engaged in iron ore mining, which may create conflict of interest. Therefore, a new independent regulator is required in the mining sector as well."

About the deteriorating financial health of steel firms, Niti Aayog said firms have a huge debt load over the past couple of years due to the combined effect of supply and demand factors.

"Situation is quite critical as they are not even able to service their interest cost. There was an aggregate debt of Rs 45,160 crore on the iron and steel industry in 2014, according to the corporate debt restructuring cell progress report, which has increased to Rs 53,580 crore in March, 2016," it added.

The working paper -- prepared by Niti Aayog Member V K Saraswat and Niti Aayog professional Ripunjaya Bansal -- said share of stressed advances has reached 25 percent, of which 19 percent are restructured standard advances and 7 percent are non-performing assets (NPAs).

It said the government has provided financial support to steel firms earlier in 1999 and 2003 while it is trying to support through RBI's strategic debt restructuring scheme currently.

"Therefore, the steel sector, which has a long gestation period, needs long-term finance like pension funds, which have the capacity to withstand cyclical volatility of profits unlike funding from banks, external commercial borrowing (ECB) or capital markets," the paper suggested.

According to the think-tank, mere changes in the National Steel Policy, 2012, will not benefit the sector, which over the last few years has been flooded with cheap imports from China, Korea and Japan impacting its sales and profit. This has also impacted its capacity to repay debt.

"There is need for a new and dynamic steel policy. Seeing the current situation of the steel sector, it may be unlikely to achieve the targets envisaged in the National Steel Policy 2012 i.e. a capacity of 300 mt and production of 275 mt by 2025," it added.

"To bring steel sector back on track, mere tinkering in the present policy would not bring out a transformational change that is required." Aayog feels there is a need to examine the entire value chain associated with the industry -- from raw materials to production of finished products -- to discover the bottlenecks in the sector.

Buy, Hold, Sell ? Hear it first on M3
Niti Aayog moots independent regulators for steel, mines sector

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login