At a recent meeting of the high-level committee on manufacturing, Prime Minister Manmohan Singh cleared
a Rs 45,000 crore investment plan of the steel ministry.
Singh approved the investment proposal for ultra mega steel plants (UMSP) considering that the expanding infrastructure sector would raise demand for steel in the country.
However, Planning Commission and the ministries of coal and mines objected to the approval given by the Prime Minister.
They feel that currently there is huge supply of steel in the country and hence there is no need to add production at this scale, especially because it would make a huge demand on scarce coal supply. Instead, steel can be imported at cheaper prices from China and the CIS countries, they argue.
While India produces 79.5 million tonne of steel a year, it imports less than 5 million tonne of the metal.
The demand for steel in India will grow at about 8 per cent, slightly above the annual GDP growth rate till 2017.
However, steel ministry argues that the demand for steel would reach 280 million tonne by 2025 at a compounded annual growth rate of 13.35 per cent.
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