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  For the construction of highways, the Modi government has allowed the usage of steel produced by secondary steel makers. Earlier, in highway construction, road developers were required to use steel produced by the primary steel producers only. The decision has been taken in the wake of rising prices of steel supplied by primary steelmakers, according to a PTI report. Union Minister Gadkari has been vocal about this as major steel firms were on a spree of price hiking for the last few months, mainly taking cues from their international peers. While the Road Transport and Highways Minister took the matter to PM Modi, seeking his intervention, steel companies justified the price hike to rising prices of iron ore.

  The minister’s concerns were partly addressed in the Union Budget for 2021-22, in which import of steel was made easier by lowering customs duty on a range of items and granting duty exemption on import of steel scrap, utilized by secondary steelmakers. As per India Ratings, domestic hot rolled coil (HRC) prices (Mumbai 2.5 mm-8 mm) inched up 45 per cent year-on-year and 3 per cent month-on-month to Rs 57,000 per tonne in mid-January 2021. In 2019-20, 103 million tonne of finished steel was produced by India, out of which around 45 per cent was manufactured by the secondary steel producers.

  Other than reining in the integrated steelmakers from further jacking up prices, the latest move will also widen the sourcing scope as well as provide a cushion to the secondary steel producers who were hit hard by the COVID-19 pandemic. According to the Ministry for Road Transport and Highways, with this move, the supplier base for steel utilized in national highways’ construction would increase, leading to more competition as well as better price discovery by the markets. This is also part of the ministry’s continuous effort to minimize costs through the use of new technology, reducing restrictions on suppliers as well as making the procurement system transparent.

  Considering the increase in steel prices, which can impact the cost of constructing NHs, earlier Gadkari had suggested the need to re-look at all conditions which could be restrictive, without impacting the material quality used for the construction of highways. The ministry has said that all-steel whether produced from ore, pellets, billets or scrap melting– would be permitted for the construction of national highways, as long as it meets the standards required for specific grades of steel.

Source : Financial Express