Mumbai: India has decided against phasing out its steel plants to bring relief to the domestic steel industry. Instead, it has decided to indulge in supply-side management in the domestic as well as export market in order to improve steel consumption.

The decision has been taken despite 30 major steel manufacturing countries deciding to consider phasing out of inefficient plants, in order to improve demand-supply equation throughout the world. Globally the total steel production is likely to touch 820 million tonnes this calendar year against the demand of 570 million tonnes, giving rise to a surplus 250 million tonnes.

Seventy steel-manufacturing companies from across 30 countries, including India, had met in Paris last month and decided on taking urgent measures to improve the lot of the steel industry globally. The meeting was organised by OECD countries at the instance of the US. The participants seemed to have preferred on closure of steel plants instead of promoting consumption of steel through artificial and temporary methods. The participants were also not in favour of doling out subsidies to the steel industry.

Indian government sources said the countrys domestic market is large enough to generate enough demand for the domestic steel industry. We have enough depth to even consume an export surplus of 1 million tonnes. With an installed capacity of just 30 million tonnes per annum, India does not even figure in the large steel-manufacturing countries in the world. Against this, Americas exports itself are in the order of about 35 million tonnes annually.

The governments confidence stems from the fact that it had, in consultation with the domestic steel industry, taken steps to improve steel consumption in the domestic market. One such step was that of building and encouraging use of steel silos in rural India to store grains. Furthermore, the government feels the impending thrust on construction activity, especially on the infrastructure side, would go a long way in improving the off-take of steel. Hence, there is absolutely no need to either close or phase out some of the existing steel plants, analysts feel.