Domestic steel sector likely to cross NSP target by 2012

New Delhi, Sep 27 (UNI) The domestic steel industry is likely to grow by 10 to 12 per cent against the National Steel Policy (NSP) target of 6.9 per cent growth by 2012 due to growing boom of the sector, industry chamber Assocham said today.

''The increased rate of growth witnessed in both economy and steel in the last three years, the NSP target of 6.9 per cent growth (57 MTPA) by 2012 will be easily overshot by at least 10 million tonnes at a growth rate of about 10 per cent,'' Assocham President Anil K Agarwal said.

Mr Agarwal said if we take into account the 11th plan targets set in the draft paper, the steel demand can grow to 73 MTPA by 2012, overtaking projected NSP target by 15 MTPA.

Thus, the country can target steel demand growth anywhere between 10-12 per cent, which would require additional capacities of atleast 26-31 MTPA by 2012 over and above the current operating capacity of 42 MTPA, Mr Agarwal added.

The chamber has also forecasted that the operating capacities of indigenous steel industry will rise to 73 MTPA against NSP projections of 57 MTPA by 2012.

The Assocham's projections are based on different levels of growth in industrial production and Gross Fixed Capital Formation (GFCF) which have been contained in a Background Paper brought out by Assocham on Galvanising Future Growth of Steel Sector.

The background paper will be released by Union Steel Minister Ram Vilas Paswan at Assocham-organised India Steel Summit to be held here tomorrow.

However, the Indian steel industry's growth need not be restricted to the limits set by domestic growth. India being one of the lowest cost producers of steel in the world, can easily replace over 50 per cent of the cross border steel market as of today, which is about 365 MT as against India's current share of 1.5 per cent(5 MT).

The Paper also points out that steel user segments such as construction, consumer durables, automobiles, etc are showing rapid growth. Non-Food credit growing at above 30 per cent per annum, and the rapidly growing over 300 million strong Indian middle class, aided by this retail loan revolution, is fueling demand to new highs.

With India's per capita income in PPP terms reaching the 3330 dollars level, India will in the next few years reach the threshold 4000-5000 dollars level of per capita income to enter the Steel Intensity stage of growth.

Thus every indicator suggests that this is the right time for the country to aim at ambitious targets for the steel industry.

It further said that the emphasis on manufacturing and infrastructure in the 11th plan approach paper, if accepted by the government, will provide a bright outlook for the steel industry in India.

If country achieves sustainable growth of 8.5 per cent in the next 5 years, it would put India in a high growth trajectory similar to that witnessed in Korea and China. In addition to this, the actual growth of manufacturing would depend on the global business cycles and level of infrastructure availability in the country, Mr Agarwal said.

Against fast growing economy and the ambitious 11th plan targets, the target set by National Steel Policy (NSP) appears to be very conservative. At the forecasted growth rates of 6.9 per cent by 2011-12, the country would end up with just 57 MTPA of production capacity, the chamber said.

It added that India's steel demand having risen at a CAGR of almost 10 per cent during the last three years along with the 11th plant target of 12 per cent manufacturing growth, the Steel Ministry and the industry should aim at much higher growth than the one set by the NSP.

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