Steel Consumers Associations and Federations, during March – April 2010, complain about effects of the price rise of steel, on the small and medium sector industries.The Ministry of Steel says that during July 2010, the prices of various steel products have come down by 4% to 13%, from the earlier prices in March-April, 2010. However, the Minister of State in the Ministry of Steel, A. Sai Prathap admitted that the Ministry of Steel has not carried out any study to examine the impact of price rise of steel on common man of the country.

He also said that the production of crude steel in the country has increased in the year 2009-10 in comparison to the year 2008-09. However, percentage of growth of steel has declined marginally in the year 2007-08 and 2008-09 in comparison to the year 2006-07. Crude steel production has increased from 50.82 million tonnes in 2007 to a provisnal 64.88 million tonnes in 2009-2010.

The production of steel depends upon inter play of various complex factors such as production capacity, capacity utilization, commercial viability, availability and cost of raw materials and the demand-supply situation in the global steel market. Moreover, the percentage growth is also a relative factor of the base line, which is steadily increasing on year by year basis.

The minister said that the low level of awareness on the varied benefits of using steel and the perception of steel as an expensive item amongst village people are the main reasons for steel consumption not picking up in rural areas of the country. Additionally, there are also related issues like inadequacy of infrastructure, which prevents selling of steel in villages and rural market, to be cost effective. To understand the pattern and potential of steel consumption in the Indian rural market, the Government has initiated a study on assessment of steel demand in the rural areas of the country.

He said that the study would cover 300 districts, 1500 villages, 4500 Manufacturers and 8000 Retailers, spread over all the 35 States and Union Territories of the country. The objective of the study is to assess trends in consumption pattern of different items of steel in the rural areas, by examining both the demand side i.e. Household and Community and Institutional uses; and the supply side i.e. Manufacturers, Retailers. Additionally, the study would examine the potential for increasing the level of steel consumption, the nature of shifts and the extent of threat of substitution from competing materials.

Minister added that the Government has decided to disinvest 10% of its shareholding in Steel Authority of India Ltd. (SAIL) and for raising of 10% of additional equity by SAIL, in two discrete tranches to be issued at appropriate times in consideration of SEBI guidelines and prevailing market conditions.