Industry body Assocham has suggested that the government should increase iron ore supply to bring down the $6 billion spent on steel imports and also current account deficit (CAD).
In its report titled ‘Iron ore exports; Threat for the Indian steel industry’, Associated Chambers of Commerce and Industry of India (Assocham) state that iron ore supply for domestic steel industry is at an all time low.
“Iron ore exports of a 100 million tonne (mt) would earn India $10 billion while the country would earn $8-9 billion through exports of just 10 mt steel, besides value addition to the raw material would lead to employment generation, capacity building and various other benefits,” it said.
Crude steel production was up 5.4% in 2012-13 to 78.31 mt while the production capacity is said to have stood at 96.71 mt registering a growth of 6.4% over the last year, the chamber said.
Further, they said that total finished steel production in the year 2012-13 for sale was 77.62 mt, an increase of 2.5% while consumption for finished steel was 73.33 mt, a growth by 3.3%. Adding to this is the estimated shortage of 30 mt of iron ore production at around 100-110 mt as against the estimated demand of 140 mt.
Stating that the Rupee depreciation made the domestic steel sector 22% more competitive, the chamber said that there has been a jump of 66% in import of scrap from about 5 mt in 2011-12 to over 8t mt in 2012-13.