The sharp surge in steel imports from China and other countries that have signed the Free Trade Agreement (FTA) with India is hurting the prospects of Indian companies, said Sajjan Jindal, Chairman of JSW Steel.

Speaking at the company’s annual general meeting on Tuesday, he said an unprecedented increase in imports is causing injury to the domestic steel industry, since steel is being shipped at a lower price for the export market.

‘Short-term strategy’

While cheap imports may benefit user industries in the short term, reliance on imported steel cannot be a sustainable business strategy, he added.

Though outlook of the domestic steel industry remains robust, it requires intervention of policy makers to remove constraints such as ease of doing business, land acquisition, environmental clearances, resource allocation, availability of finance at competitive rates and infrastructure bottlenecks, he said.

The Mines and Minerals Development and Regulation Amendment Act, recently passed by Parliament, enables transparent auction of iron ore mines, said Jindal. The global steel industry is currently reeling under the impact of rising steel exports from China, weak demand, and volatile currency movements.

In addition, the domestic iron ore availability remained bleak and pricing was not fully aligned to global benchmarks. This impacted the domestic steel industry’s competitiveness and margins were affected last year.

For Indian players, Jindal said, the challenges were — sluggish domestic demand due to delay in revival of investment cycle and infrastructure spending, domestic iron ore supply being priced higher than seaborne markets, dumping of steel into India by steel-surplus countries like China, Russia, Japan and Korea, and finally, a stable rupee wiping out India’s competitiveness in the export market.

Without announcing any fresh capital investment, Jindal said the company would focus on tapping new markets and expanding its presence within the country.

“With expansion projects at Dolvi and Vijayanagar underway, we look forward to consolidating our leading position in the year ahead,” he said.

Related Topics