Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

The Indian steel industry is daunted by weak demand beside having to shut production amid the COVID-19 lockdown. Already faced with liquidity issues and production cuts, the sector like any other, needs government support to tide over the outcome of lockdown. The Confederation of Indian Industries (CII) has suggested a slew of measures to revive the steel industry post lockdown, according to media reports.   


CII has urged the government to implement infrastructure projects within a stipulated time frame. Over 50pc of steel demand in India is driven by infrastructure and the construction sector. The move is likely to create a healthy demand for steel. Among other measures, CII suggests packages to aid steel downstream industries like the automotive. A ban on imports of seconds, defectives and re-rollable scrap steel could also help domestic steelmakers the industry body believes.


With the lockdown restrictions, supply chains for companies have been disrupted. The industry body thus urged the government to regularise the movement of goods to avoid congestion at ports. With over 150,000 scrap consignments stuck at ports, detention and demurrage charges are set to be heavy on importers’ pockets. Like the Material Recycling Association of India (MRAI), CII requests the government to ensure that shipping companies adhere to the waiver notifications. It states that a dedicated corridor for steel and other bulk material movement and completion of national waterways 5 would also ease logistical issues.

On the raw material front, CII has requested the government to do away with the import duty on essentials like coking coal, coke, ferroalloys, zinc, and metallurgical limestone. At the same time, it calls for a ban on exports of these steelmaking essentials.


Cash flow measures

With downstream industries coming to a standstill, steel sales in the country have been hit. Steelmakers are facing a steep decline in their margins. CII has also suggested measures like a grace period of 90 days for interest payment on loans, including non-convertible debentures. CII also suggests that the government defer payments like GST, income tax and import duties payable during the lockdown by 30 days. The body suggests these instalments should be allowed to be paid in six monthly instalments.


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