India’s largest steelmaker Steel Authority of India Ltd (SAIL) plans to invest ₹1.50 lakh crore by 2025-26 to increase the production capacity at its five integrated plants from 23.5 million tonnes per annum (mtpa) to 50 mtpa.
The Maharatna company, with a turnover of nearly ₹50,000 crore, is awaiting the Government’s decision regarding its proposal to set up a body, on the lines of Power Finance Corporation (PFC), to help finance SAIL’s targets, Chandra Shekhar Verma, Chairman and Managing Director, told BusinessLine on the sidelines of Global Steel 2014 , the Ninth International Conference on Steel and Steel-Making Raw Materials, that concluded here recently.
The two-day event was organised by Gujarat NRE Coke Ltd.
On average, India will have to invest $1 billion to increase steel production capacity by 1 mtpa, 60 per cent of which would go into establishing plant machinery.
With India hoping to treble steel production to 300 mt in the next 12 years, the country would need investments to the tune of $200 billion (₹12.40 lakh crore). India currently produces 83 mt of steel.
Verma said to finance the increase in production, SAIL had proposed to the Ministry of Steel to set up a PFC-type entity to fund steel projects.
In order to treble production capacity, India will have to import equipment worth $120 billion but this dependence can be reduced if the country sets up manufacturing units for this equipment.
“We would also need lots of metallurgical engineers to achieve our targets,” Verma said.
He added that India needs to invest ₹160 crore on research and development in steel sector under the private-public partnership (PPP) mode and stressed that the country could benefit from the emerging area of synthetic coke to reduce dependence on imports.
By 2025-26, India will have to import about 160 mtpa of coke to support its steel industry.
He said that that many Indian companies are forced to import iron ore, and scarce coking coal is being diverted to thermal power plants to produce electricity instead of using it in steel production.
The requirement of massive investments could be materialised with the coming together of financial institutions and banks to pool in their resources through a PFC-like entity.
The power sector had got a fillip with the setting up of PFC, a dedicated financial entity.