Picture: REUTERS
Picture: REUTERS

New Delhi — India has requested Japanese and South Korean steel makers to step up their investments by building new plants in the south Asian country to produce high-grade automotive steel, a senior public servant told Reuters.

India mainly imports the high-tensile steel from Japan and South Korea. However, demand for the auto-grade metal is rising in India as companies such as Hyundai Motor ramp up their production to make the country a manufacturing and export hub for small cars.

The Indian government will encourage Japanese and South Korean companies to start greenfield projects in the country, Steel Secretary Aruna Sharma told Reuters in an interview, without giving details.

"Japanese companies can come through joint ventures or independently because India is becoming an auto manufacturing hub so the requirement of auto-grade steel is going to go up," Sharma said.

Consultants IHS Markit have forecast that India will become the world’s third-largest car maker by 2020, up from fifth-largest currently.

Sharma also said state-owned Steel Authority of India and ArcelorMittal, the world’s biggest steel maker, were "fine-tuning" the terms of their agreements for a $1bn automotive steel plant in India.

Billionaire Sajjan Jindal’s JSW Group has already tied up with Japan’s JFE Holdings to produce 2.3-million tonnes of auto-grade steel.

Coking coal

The Ministry of Steel has favoured scrapping the 2.5% import tax on coking coal and ferro-nickel, key steel making raw materials, to keep a lid on input costs and Indian steel makers are importing more coking coal from Canada and Poland to diversify beyond their traditional supplier, Australia, Sharma said.

India’s coking coal imports rose 13% in the year to March 31, with higher purchases from Canada and the US, largely at the expense of Australia.

"Australia always suffers from flooding and it makes a lot of sense to have other alternatives," Sharma said.

Exports to US and EU

Sharma said India is talking to US officials about easing quotas and tariff restrictions on Indian steel exports.

"The US is open to discussions," she said.

India must have the right to seek exemptions from US tariffs and it must have the liberty to choose the categories that could come under US import quotas, if they are enacted, she said.

India will also continue to pursue its formal complaint at the World Trade Organisation, where it challenged US tariffs on steel and aluminium, she said.

Separately, Sharma said Indian authorities would talk to European Union officials in September to express their concerns over falling steel exports to the bloc.