38 MoUs signed to save nearly Rs 40,000 crore capital goods import

Bhubaneswar: Leading Capital Goods (CG) producers from the across the globe inked 38 MoUs with leading Indian steel companies envisaging a reduction in imports of CGs meant for the steel sector worth Rs 39,400 crore by promoting manufacturing of capital goods in the country.

The MoUs were signed at a conclave in Bhubaneswar which was organized by Ministry of Steel, Government of India in association with Confederation of Indian Industry (CII) and MECON.

The National Steel Policy – 2017 envisages the creation of 300 million tonnes (MT) of steel capacity in the country by 2030-31 as against existing 130 MT. The estimated import of plant and equipment, for reaching 300 MT capacity, will be around USD 25 billion.

Further, for meeting the spares requirement, it is estimated that at 300 MT capacity level, India will have to spend about USD 500 million annually for import of proprietary and other spares.

In his keynote address, Odisha Chief Minister Naveen Patnaik said the MoUs inked today for the CG sector has the potential of transforming India into a world-class manufacturing hub.

The CM said that Odisha has a rich mineral base and produces 14% of the country’s total mineral production in the country.

Odisha is focusing on attracting major investments in the metal sector, the Chief Minister said and added that the state has ample potential to become a major steel hub.

In his welcome address, Steel Minister Chaudhary Birender Singh said that in order to ensure that the MOUs which are being signed today culminate into manufacturing of capital goods, a purchase preference policy to cover all purchases of steel products, including capital goods is being worked upon by the Steel Ministry.

It will ensure that products/product categories which do not get covered by the Domestically Manufactured Iron & Steel Policy will get covered by the proposed policy on the line which has been prescribed by the DIPP.

“These MoUs are a win-win for both.  The foreign manufacturers who will enter into a JV with an Indian firm can get the advantage of purchase preference. Indian manufacturers will benefit from the foreign investments and technology and also get to fulfil the eligibility condition of experience,” the minister said.

In his address, Minister for Heavy Industries and Public Enterprises, Anant G Geete, said the Indian manufacturing companies have the capability to manufacture all non-proprietary items and the Government is committed to facilitate technological tie-ups between domestic CG producers and their foreign counterparts for capacity building.

He recalled that his ministry has helped in building a machine tools hub in Karnataka and suggested that his ministry proposes to do the same in Odisha and sought the state government’s cooperation in this regard.

Minister for Petroleum & Natural Gas Dharmendra Pradhan said that Odisha has mega steel projects besides small and medium steel mills which also contribute significantly to the state’s overall steel production.

The government believes that Odisha has the potential to produce nearly 100 Million Tonne of the total 300 MT output targeted by 2030-31 as the state is home to the sizeable mineral resource base.

He welcomed the proposal made by Geete to set up a machine tools park in Odisha.

Secretary, Ministry of Steel, Binoy Kumar, said it is in the interest of stakeholders that the Capital Goods Industry should be strengthened so that competition increases, and this helps in reducing the capital cost of projects.

Today, the imported plants may come at a lower cost but this is more often than not followed by their high priced maintenance contracts & spares. By local manufacturing, the maintenance of plant and machinery can also be done economically.

Adam Szewczyk of the World Steel Association said India steel demand is set to develop in the short and medium term due to favourable macroeconomic conditions and ambitious reform agenda.

It will be very soon the second biggest market in the world. The low steel use per capita in India and structure of steel used with dominating construction typical for developing nations leave a lot of opportunities for development, he added.

Special Secretary and Financial Advisor of Steel Ministry Saraswati Prasad thanked all the dignitaries for participating in the Conclave and wished that the fruitful deliberations would serve as a roadmap to cement the ties between CG players and steelmakers.