Ministry of Steel to Launch Rs 100 Cr R&D Fund

There is no doubt about the potential of Indian industrial capabilities and entrepreneurial talent. But there is a huge work required in order to establish a culture which could be terms as pro-innovation. A lot can be done around this kind of goal. The first and foremost step which can contribute significantly in this direction is promotion and motivation for research and development activities.

In this bid, Narendra Singh Tomar, Union Minister for Ministry of Steel, Government of India announced that a fund of Rs 100 crore is under consideration for setting up research and development (R&D) units with participation from industries and the government to overcome the technological gaps.

“It is under the active consideration of the government to infuse more funds in this initiative to utilize locally available cheap raw material, to remain competitive in the world market”, the minister said while inaugurating the ASSOCHAM 8th India Steel Summit- Investment Scenario and Raw Material Security here, according to a press release.

He said the steel capacity has increased by 20 Mn tonnes to the level of 100 Mn tonnes in 2013-14 from 80 Mn tonnes in the year 2010-11, while the production has increased merely from 70.67 to 81.54 Mn tonnes in the same period.  This clearly depicts the sharp drop in capacity utilization to 82 per cent in 2013-14 from the level of 88 per cent in 2010-11.  The significant decline in capacity utilization is solely due to the unavailability of Iron Ore to steel industries, he said.

Tomar added that Iron ore production in the country has come down from 218 million tons in 2009-10 to 144 million tons in 2013-14 due to restriction of mining.

This announcement can have a great impact on Indian manufacturing industry. He further said, “India’s per capita steel consumption is around 60 kg, which is not only very low, but also much lower than the international average of over 215 kg.  This indicates a huge gap in prosperity levels, though it also reflects a huge potential for the growth in steel consumption.  Realizing the enormous potential the high level committee on manufacturing has decided to plan ambitiously for crude steel capacity of 300 million tonnes by 2025-26.”
“Overall techno-economic performance of Indian steel industry is below global benchmarks mainly due to poor quality of raw materials/inputs, prevalence of obsolete technology and lack of R&D to overcome the technological gaps,” he said.

Indian steel industry would need to adopt measures like beneficiation of iron ore and coal and increasing use of agglomerated burden in blast furnaces, added Tomar.

Investment in R & D in Indian steel industry has been very low in the range of 0.15-0.25 per cent of the sales turnover. I will also urge upon the Indian industry to focus on R&D initiatives in a big way to utilize locally available cheap raw material, to remain competitive in the world market, he said.

Also speaking on the occasion, Minister of State for Mines and Steel, Vishnu Deo Sai, said, presently, the role of the Government is changing from a regulator to that of facilitator and coordinator. Based on the suggestions of National Manufacturing Competitiveness Council (NMCC) to reduce the time required for development of Greenfield sites for setting up steel projects, Ministry of Steel is contemplating to adopt Special Purpose Vehicle (SPV) model for awarding projects to investors in the steel sector.

Sai said that steel industries in India are presently facing a slow growth rate as demands from key consumption sectors such as real estate and infrastructure are yet to gather momentum. In the first half of the current financial year, while crude steel production went up by around 2.4 per cent, the real consumption of finished steel has grown by 0.5 per cent only.  Thus, to complete the year with minimum growth of 3 per cent, the consumption in second half must grow by 7 per cent which is undoubtedly a tough challenge.

India’s largest steel-maker, state-owned Steel Authority of India Limited, will embark on a biggest expansion drive in its history to more than double its capacity to 50 million tonnes by 2025, a move that it likely to involve in investment of Rs. 1,35,000 crore, highlighted Sai.

The expansion will be executed in two phases and will see the company’s steel-making capacity go from the projected 23.5 million tonnes per annum (mtpa) in 2015-16 to 35 mtpa by 2020  the end of the first phase and then to 50 mtpa by 2025-26.  This round is bigger than the on-going Rs. 72,000-crores expansion started in 2012, which would see the steel makers capacity go upto 23.5 mtpa by the end of 2015-16.

Steel industry across the advanced economies have identified climate change as a major challenge and have been proactive in reducing energy consumption and greenhouse gas emission by aggressive R&D and technology intervention adopting the clean and green and state-of- art technologies in all areas of production, said Sai.

On the other hand, Chairperson, ASSOCHAM National Council on Iron and Steel and Managing Director, Jindal Saw Limited, Sminu Jindal said, “raw material availability at affordable price is essential for success of steel industry. A major reason behind the price of raw material for manufacturing steel is the shipment/transportation cost that can be significantly reduced by utilizing our longest navigable coastline and inland waterways. This water based transport is effective as operating costs of fuel is lower than for corresponding volumes of moment by road, rail or air.”

Jindal further said, “Raw material security therefore has become a critical issue for the growth and development of domestic iron and steel industry. So, there is a need for close cooperation between various stakeholders with an efficient supply chain for raw materials, logistics support and skill development set up”.