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38 MoUs signed for capital goods manufacturing in India for steel sector

Leading Capital Goods producers from the across the globe inked 38 MoUs with leading Indian steel companies envisaging reduction in imports of CGs meant for the steel sector worth INR 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.

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 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 National Steel Policy – 2017 envisages creation of 300 million tonnes of steel capacity in the country by 2030-31 as against existing 130 million tonnes. The estimated import of plant and equipment, for reaching 300 million tonnes 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. 

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 macro-economic 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 use with dominating construction typical for developing nations leave a lot of opportunities for development.
Source : STRATEGIC RESEARCH INSTITUTE, STEELGURU
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