Assocham urges govt to address steel sector's core issues

Industry body Assocham today urged the Centre to initiate certain measures for the domestic steel sector such as extending easy financing, devising long-term freight tariff policy and augmenting transportation infrastructure among others.

"A comprehensive package for steel sector should be unveiled encompassing special financing arm for providing capital for expansion of capacities, easy extension of working capital loans, long-term policy on freight tariffs and augmenting transportation infrastructure capacity to meet needs of steel production," it said in a statement.

Considering that higher transport costs result in higher costs of production of steel in India, there is an urgent need to bring down freight tariff rates by up to 25 per cent across all raw material and steel products to gain competitive edge, it said.

To prevent import of cheap steel, it asked for measures like imposition of minimum import price (MIP) and safeguard duties on a sustained basis and inclusion of pig iron, sponge iron and billets in the list of products covered under MIP.

"Banks should extend working capital loans to steel companies on a priority basis, especially those which have not defaulted on interest payment, while structural problems relating to high debts of various steel companies would take time to resolve," it added.

There is a need to create a special funding mechanism for providing capital for brown-field expansion of capacities at the existing steel mills, it said.

It also demanded for withdrawal of import duty of five per cent imposed upon metallurgical coke and coking coal to restore competitiveness in the domestic steel industry.

The steel ministry should bring down rate of royalty on iron ore to reduce the cost of raw materials for steel plants, it added.

Assocham has suggested the government to constitute an authority either at the central or state level to fix the ceiling on road freight rates with a view to break local monopolies.

"Transporters charge exorbitant rates for movement of iron ore and other raw materials from mines and ports to steel plants, besides they also prevent free competition through their dominating presence in local areas," it said.