The mining and quarrying sector in India experienced a cumulative growth of 5.3% during FY 2016-17. It is known that bureaucratic hurdles have undermined the positive development in the sector for decades. The Indian Government is undertaking various steps to attract investors and increase domestic production. This should reduce the dependency on imports.
The Steel Industry is on the spot-light and will remain there for decades with the government’s efforts to boost domestic production, acquire technology to produce higher value products not yet manufactured in the country, as well as attract investments both domestic and foreign. The steel exports have increased by 57% and imports decreased by 34%.
The Union Budget 2017-18 allocated $59 billion for steel-intensive infrastructure projects, such as ports, roads, railways and power. This will drive demand and India seems to be set to accelerate domestic production. While the government projects a 7% annual steel demand growth rate till 2030, according to World Steel Association (WSA), India’s steel demand is expected to grow by 6.1% in 2017 (88.6 MT) and 7.1% in 2018 (94.9 MT). To meet these requirements, Prime Minister, Narendra Modi, has approved a plan to nearly triple domestic steel capacity and raise consumption manifold by 2030. Upgrades are being made to existing steel mills and state-owned companies are stepping in to build new steel plants. The world’s third largest steel producing market is advancing quickly to overtake Japan and become second largest by the end of 2017.
National Steel Policy 2017: The new steel policy intends to enhance domestic consumption, produce high quality steel locally and make the sector globally competitive. The policy will aid in achieving the aim of 300 MT steelmaking capacity by 2030-31. The policy also envisages investments of about $155 billion and tapping foreign investment opportunities.
Land-for-asset policy in drafting to attract steel investors: The government plans to release detailed guidelines on the mandatory use of locally made steel in big government projects, and use international benchmarks to prevent price fluctuations. The government will also help foreign companies secure land in exchange for equity or setting up joint-ventures with local firms. The policy will ease the transfer land to foreign companies so that they can set up manufacturing plants without having to worry about approvals.
Another area that is in the talks is the Coal sector. India, the third largest coal producer is in the process of opening up commercial coal mining to the private sector for the first time in four decades. About 12 mines will be auctioned. In this regard, the government is working of several auction models for commercial mining. The aim is to promote sustainable and efficient mining and make India energy self-sufficient. Various auction models are being worked on for the allocation of coal blocks for commercial mining by private companies and hopes are to auction these by end of December 2017.
In the last two years, we have witnessed that the government is focused on improving transparency in the mining sector in India. Initiatives by the Government include allowing most FDI to proceed without pre-approval, allocating mining blocks through a transparent auction procedure, lengthening mining concessions to 50 years from 30. The push is clear with the various government efforts and the Indian Mining Industry will observe a rise in Foreign investment.
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