Draft policy for promotion of greenfield investments in the steel sector 

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Source: PRS India

The Ministry of Steel has published a draft policy for the promotion of new steel plants.

Need for greenfield steel plants

• The Ministry has estimated that an additional capacity of 25-30 million tonnes per annum of steel production will be required to meet the domestic steel consumption demand by 2024-25. 
• Such capacity expansion will require setting up new plants (greenfield steel plants) with investments worth Rs 1-1.5 lakh crore. 

Key challenges to be addressed by the draft policy

The draft policy attempts to address the key challenges in setting up new projects, such as: 

• Availability of land
• Long term availability of iron ore at a competitive price
• Faster grant of statutory clearances, and 
• Incentives for a large investment

Important features of the draft policy

Operating Models: The draft policy provides the following models for providing land and iron ore mines to the new projects: 

• Steel CPSEs driven: Excess land available with central public sector enterprises (CPSEs) in the steel sector and supply of iron ore from mines under such CPSEs can be leveraged for this purpose. 
• State government-driven: State governments will be responsible to identify suitable land for the project. Mines may be provided through the following options: 
  1. Direct auction of a mine
  2. A specified mine may be reserved for a CPSE/state PSE and then long-term linkage (for more than 15 years) to the specified mine may be provided to the project, or 
  3. A specified mine may be reserved for a state government company and the project owner may be given 26% equity in the company. A joint auction will be conducted to transfer ownership of land and mines. 
• Role of the Ministry: Key responsibilities of the Ministry of Steel under the draft policy include:  
  1. Setting up a task-force for reviewing the projects and facilitating approval and infrastructural support for the projects
  2. Providing a single window for environmental and forest clearance
  3. Leveraging incentives under the state industrial policies and the central government schemes for these projects
  4. Setting up a project monitoring cell to drive completion of a greenfield project within the specified timeline, and  
  5. Ensuring prioritization of projects for expansion of logistics infrastructure such as railways, roads and slurry pipelines. 

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