Stressed-ridden domestic steel players may find it difficult to make fresh investment of around USD 140 billion for government's ambitious capacity expansion plan of 300 mt by FY 2031, ICRA said in a report.
Stressed-ridden domestic steel players may find it difficult to make fresh investment of around USD 140 billion for government's ambitious capacity expansion plan of 300 mt by FY 2031, ICRA said in a report.
The National Steel Policy (NSP) 2017, which aims at increasing the crude steel capacity to 300 mt by FY2031 from the current capacity of 128 mt, would require an investment of around USD 140 billion, the report said.
Given the weak financial health of many domestic steel players, this seems a tall order. In this context, the definitive anti-dumping duties (ADD) and the government's efforts towards sorting out of stressed assets assume significance, since, in the current scenario, lenders may not have the appetite to extend fresh funds to the stressed steel sector players, ICRA said.
With a view to protect the domestic flat steel manufacturers, the government recently took a significant step of imposing five-year definitive ADD duties on import of hot-rolled (HR) and cold-rolled (CR) flat steel products.
During FY2016, domestic steel players were at the receiving end due to cheaper imports from countries like China, South Korea, Japan, Russia, and Ukraine.
"Flat steel products covered under the ADD regime had contributed around 60 per cent to country's cumulative steel imports between FY2015 and FY2017 and, therefore, the current measure is expected to keep India's steel imports under check in coming years," ICRA Senior Vice-President and Group Head, Corporate Sector Ratings, Jayanta Roy said.
Global trade action on dumping of steel has been led by the European Union (EU) and the United States both countries putting in place import barriers on multiple steel products not only from China, but also from many South-East Asian countries, including Japan and South-Korea.
The domestic steel players have generally not been at the receiving end of these measures thus far, which presents opportunities for domestic mills to increase their market share globally, especially in the EU region, which remains India's largest destination for steel exports.
"There is significant overcapacity in the global steel industry, and any softening of international prices like in the recent past may affect domestic prices too, if exports are non-remunerative, leading to price-based competition in India, especially given the slackness in domestic demand," Roy said.
(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)
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