India mulls local steel requirement for $59 bn infra spend 

 The government expects the move to boost sales of local companies such as JSW Steel and Tata Steel , and eventually attract global steelmakers such as ArcelorMittal and POSCO to invest in the country, five steel ministry sources told Reuters. India mulls local steel requirement for $59 bn infra spend India may soon mandate the use of local steel in government infrastructure projects worth billions of dollars, sources said, pitching it as a WTO-compliant protectionist measure aimed at further cutting cheap imports, mainly from China. The government expects the move to boost sales of local companies such as JSW Steel and Tata Steel , and eventually attract global steelmakers such as ArcelorMittal and POSCO to invest in the country, five steel ministry sources told Reuters. India, the world's third largest steel consumer, has budgeted a record USD 59 billion for 2017/18 for steel-intensive infrastructure projects such as ports, roads, railways and power. "The preference in procurement will enhance demand and thus production. Definitely it is 'Make in Steel' and thus 'Make in India'," Steel Minister Chaudhary Birender Singh told Reuters. 

"It is preference with no compromise on quality and competitive pricing. To use domestic produce is an acceptable norm." Analysts said a similar proposal by US President Donald Trump requiring the use of domestic steel to build two energy pipeline projects could violate international trade laws, but Indian officials say their plan will fall within WTO rules. A government document on the proposal, seen by Reuters, cites an article under the General Agreement on Tariffs and Trade of the World Trade Organisation, allowing an exception to "procurement by governmental agencies of products purchased for governmental purposes and not with a view to commercial resale or with a view to use in the production of goods for commercial sale". Abhijit Das, head of the New Delhi-based think-tank Centre for WTO Studies, said the provision had been invoked by the United States in the past and India could do the same. The protectionist move would, however, shrink foreign companies' sales in the world's fastest growing steel market. Japan has already threatened to take India to the WTO over some recent steel restrictions. BOOST PRODUCTION, CUT IMPORTS India wants to nearly triple its production capacity by the next decade and acquire technology to produce higher value products including automotive steel. "Current level of capacity utilisation of domestic steel producers is below 80 percent," said Sanak Mishra, secretary-general of the Indian Steel Association in New Delhi. 

"If demand picks up on account of increased government spending on infrastructure and government mandates the use of domestic steel in such projects, the domestic steel producers are fully capable of raising the production level." The proposal to use local steel, which will not be applicable to smaller projects, will be taken to Prime Minister Narendra Modi's cabinet in a month, two of the sources said. Modi, under pressure to create millions of jobs, wants steel to contribute heavily to the government's target of raising the share of manufacturing in the economy to 25 percent by 2022 from 17 percent now, according to a steel ministry document seen by Reuters 

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