The steel sector in India has outstanding loans of around Rs 3 lakh crore to different banks, making the segment one of the biggest contributors to non-performing asset (NPA) in the nation. Minister of Steel, Chaudhary Birendra Singh expressing concern over the prevailing situation in the steel industry has said that the government was making efforts to revive the industry so that the steel companies repay the loans.
The minister said that a suitable package to revive the sector is currently underway; Representations have been received from Indian Chamber of Commerce and Indian Steel Association to consider working out a suitable package to support steel industry. He added that efforts are on by banks and Reserve Bank of India too, to rebuild the credits given to the steel industry so that the loans could be recovered.
He further added that the Indian steel industry is currently passing through a severe downturn, due to global overcapacity, resulting in major steel producing countries selling their products in India at prices often lower than their cost of production. Consequently, domestic producers have had to significantly reduce prices, thereby eroding their profit margins.
Though, the Minister also reiterated that there is significant potential for growth of Indian Steel sector underscored by the fact that per capita steel consumption in the country at 61 kg is much lower than the global average of 208 kg. The steel industry is also expected to benefit from the budget allocation of more than Rs 2 lakh crores towards infrastructure in Financial Year 2016-17, which will spur steel demand.