Indian steel output likely to multiply

It’s raining steel plants, OR, at least, MoUs to set them up, in Jharkhand, Orissa and Chhattisgarh.

At last count, the states had signed MoUs worth Rs 5.4 lakh crore, which, if they all result in investments on the ground, will Indian steel output shoot up from 49.5 million tonnes per annum now to 243 million tonnes over the next seven-to-eight years.

“It’s very ambitious but not absurd because I think the projection of 100 million tonne per annum capacity by 2019-20 made in the Steel Policy 2005 is conservative,” says Navin Vohra, Partner, Ernst & Young. He, however, hastens to add that “many of these MoUs will obviously fail to materialise into actual investments”.

Orissa, for example, reportedly signed four steel MoUs in September and scrapped five others in the same month. Two issues that have rendered many such MoUs into worthless paper are, of course, difficulties in land acquisition and bagging iron ore mines.

Among the major players who have signed MoUs to set up steel plants are Tata Steel, Arcelor Mittal, Essar Steel, the Jindal Group, Posco and tens of smaller companies.

And even if a quarter of the MoUs finally result in investments, then India’s steel output will jump dramatically over the next half a decade.