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:
- Direct auction of a mine
- 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
- 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:
- Setting up a task-force for reviewing the projects and facilitating approval and infrastructural support for the projects
- Providing a single window for environmental and forest clearance
- Leveraging incentives under the state industrial policies and the central government schemes for these projects
- Setting up a project monitoring cell to drive completion of a greenfield project within the specified timeline, and
- Ensuring prioritization of projects for expansion of logistics infrastructure such as railways, roads and slurry pipelines.