Steel industry owes Rs 3,00,000 crore to banks

New Delhi: The steel industry has outstanding loans of around Rs three lakh crore in various banks, thus making the sector one of the largest contributors to non-performing assets (NPA) in the country.

Steel Minister Birender Singh said in Lok Sabha that efforts are on by banks and Reserve Bank of India to restructure the loans given to the steel industry so that the loans could be recovered.

"Yes, it is true that the steel industry has an outstanding loan of around Rs 3,00,000 crore," he said while responding to Congress member Jyotiraditya Scindia's comment that the steel sector was one of the largest contributors to NPA in the country.

Expressing concern over the prevailing situation in the steel industry, Singh said the government was making efforts to revive the industry so that the steel companies repay the loans.

The Minister said during Question Hour that China has produced 25 to 30 per cent more steel than its domestic consumption and the country has been trying to export steel to India where its demand is growing.

With Chinese steel in the market, the prices have fallen, resulting in the domestic steel producers suffering heavy losses.

To check this situation, the government has imposed Minimum Import Price (MIP) for steel with effect from February which helped the price again going upward in the last 2-3 months, Singh said.

"However, the global steel price continues to be low, which is a matter of concern," he said.

The Minister said the Indian steel industry was currently passing through a severe downturn, due to global overcapacity, resulting in major steel producing countries selling their products in India at prices often lower than their cost of production.

"Consequently, domestic producers have had to significantly reduce prices, thereby eroding their profit margins," he said.

Representations have been received from Indian Chamber of Commerce and Indian Steel Association to consider working out a suitable package to support steel industry, he said.