Deependra Kashiva, pioneer in making sponge from scrap has truly put into practice of converting waste into wealth. Kashiva who is Executive Director of Sponge Iron Manufacturers Association (SIMA) outlines the challenges of the industry and shares his thoughts to SMEpost.com correspondent on how to take the industry forward considering that India is the largest sponge iron manufacturing country in the world. Excerpts:
Q : How the sponge iron industry has evolved over the years and what is its contribution to the national economy?
A : In the late 70’s, foreign exchange outgo on the import of steel melting scrap was the second highest after the crude oil. At that time, government had decided to encourage the sponge iron industry. To begin with, a pilot plant was set up by the steel ministry with UNDP assistance to test the suitability of Indian iron ore and coal. Sponge iron industry was delicensed in 1985 much before the deregulation of the Indian economy in 1991.
Today India is the largest sponge iron producer in the world and maintaining this status for the last consecutive 12 years. We are producing about 24 million tonnes sponge iron and are importing about 5 million tonne steel scrap annually. Taking into account the current steel scrap prices, the foreign exchange outgo is about US $ 1000 million.
Apart from foreign exchange saving, this industry utilises 100% indigenous raw materials like iron ore and coal unlike the blast furnace route of steel making where more than 35 million tonnes coking coal is imported. This is the industry which is mainly confined in the small and medium sectors and is geographically widely located, provides direct employment of more than 2 lakh persons and generates more than Rs. 40,000 crore of revenue across the value chain.
Q : What are the bottlenecks that the industry faces now and how these can be overcome?
A : The production of the sponge iron in India is on the wane for the last 3 years because of many reasons such as sluggish demand, dumping of steel from China, Japan, South Korea, Russia etc, shortage of basic raw materials like iron ore and coal at affordable prices and high financial cost. Presently, Government is auctioning most of the minerals including iron ore and coal. Small players cannot compete with the financially strong competitors and are losing out. Therefore, there should be special dispensation for the small and medium sized sponge iron producers particularly from public sector undertakings like NMDC and OMC for iron ore and CIL for coal. This sector should also be provided financial assistance at concession rates. The RBI circular dated July 15,2014 on Flexible Long Term Project Loans to Infrastructure and Core Industries which provides structuring mechanism for aggregate loan of Rs. 500 crore and above needs to be brought down to the level of Rs. 100 crore to cover SME sector.
Q : What is the future of the industry going forward, particularly when India is talking about creating 300 MT steel production capacity by 2025-26?
A : We are of the considered opinion that additional 190 MT steel production capacity to meet the ambitious target of 300 MT cannot be entirely achieved through the conventional blast furnace route because of the various reasons such as huge requirement of land, finance, import of coking coal etc. We have to look for some other alternate routes of steel making. Since India has mastered the art of making the steel through the sponge iron route.
Q : How the industry is impacted with the series of taxes levied on steel imports to India?
A : On this industry, there is not much impact of the recently announced taxes on the steel imports.
Q : How the introduction of MIP is going to impact the industry?
A : The proposed MIP mechanism is a welcome step to protect the Indian steel industry which is severely facing dumping of various categories of steel. We, in the association, strongly feel that all sectors of the Indian steel industry, whether they are main producers or secondary steel producers, should be covered in the proposed umbrella. We hope that metallic and hot rolled long steel products should also be covered to provide much needed relief for the survival of the secondary steel sector.
