Contribution of Indian Steel Industries
The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost-effective labor. Total steel production in the country is expected to increase by 7 per cent in 2016.The Indian steel industry is very modern with state-of-the-art steel mills. It has always strived for continuous and modernization up-gradation of older plants and higher energy efficiency level.
2) Current position of steel industry
Currently, the domestic steel sector, is bleeding heavily by massive imports . Government tried to revitalized the steel sector with the introduction of 525 Scheme ( where loans were extended to 25 years with a condition that interest rates would be reset after every five) but it didn’t help much because people were still not paying their loans.
The gross non-performing assets in the steel sector are expected to rise 4% in a year to nearly 12% by March 2017.The steel industry is the highest leveraged sector in India and banks are not in a position to extend fresh loans.
3) Steel industry – Post GST
i) Reduction of logistics cost and time
Presently if a truck passes thru different states there are number of indirect cost attributed to the product and this increase the price of the product. Each time it crosses a state there are number of check post which delay the supply of goods to the customer. In the post GST regime there will 40 to 45 % saving in time.
ii) Generation of employment in un developed states:
Implementation of GST will reduce corruption in highly corrupt states of Orissa, Jharkhand, Karnataka and Chhattisgarh, because of transparency in the post GST regime. Middleman will be eliminated from the system. In the post GST regime more and more person will have to follow the line of business and that will generate the employment and in turn will improve the GDP
iii) Ulitization of natural resources:
GST will give more money to Under-developed states for their resources. By proper auctions and elimination of the middleman the state govt will be able to fetch the proper value and price of their resources .
iv) Protection to domestic industry:
Steel industry plaguing with a rising threat of imports, GST rates on imports should be at the same level as for domestic supply.
v) Reduction in production cost:
The likely rate of GST may be within 12-% against the current average rate of indirect tax at 20%. It would, therefore, reduce production cost.
4) Government Initiatives
Recent government initiatives in this sector are as follows:
5) Conclusion: With the rolling of GST and with the above mentioned positive initiatives of Government of India