Govt assures measures to reduce logistics cost for steel players

Jul 2,2020

On Wednesday, the government told steel makers that it will take effective steps to reduce the transportation costs of products that currently reaches as high as 28 per cent. Speaking at the FICCI-organized webinar on 'Supportive Logistics for Indian Iron and Steel Industry,' Minister of State for Steel Faggan Singh Kulaste told participants that high logistics costs are also a matter of concern to the Ministry.

He sought input from stakeholders on how to help decrease the logistic cost of raw materials and assured them that the Ministry would take action accordingly.

Kulaste said India has an aim of manufacturing 255 million tonnes of steel by 2030. "In this case, from the mines to the last-mile client, between 800-850 million tonnes of raw material will need logistics. We will need huge infrastructure for this."

Anticipating future needs, the government has already begun working on mega logistics projects such as Sagarmala, Bharatmala and Dedicated Freight Corridor, Kulaste added.

The Minister said that at present, for every 250 kilometres, the cost of transporting iron ore, a main steel making raw material, is Rs 800-Rs 1,000 tonne by rail. He added that it is between Rs 2,000 and Rs 2,500 through the road; whereas on the waterway, it is about Rs 450-550 and through the slurry pipeline, it is in the range of Rs 80-100.

He said that once these projects are completed, they would help to reduce both the cost of transport and time for materials.

V R Sharma, co-chair of FICCI Steel Committee and managing director of Jindal Steel and Power Ltd (JSPL), requested the minister for his intervention to bring down the logistic cost for the industry.

He said, "It costs about Rs 8,000 a tonne to transport steel in India, which is a massive amount. It contributes almost 28 a cent to the cost of the factory and the last-mile client has to bear it. Port handling charges add about 10 per cent. I urge the Minister to take steps to get it down to about Rs 4,000 per tonne."

Alok Sahay, convenor of FICCI Steel Logistics Sub-Committee and Executive Director (Commercial) of Steel Authority of India Ltd, proposed a long-term rail service agreement to provide appropriate rakes within a specified timeframe. This would help consumers manage their supply chain in a better way. He also suggested a uniform rate for transportation of materials up to 100 km by railways.

Pankaj Satija, a senior member of FICCI Steel Committee and chief regulatory affairs of Tata Steel Ltd, said logistics is an important part for the industry.

He suggested dedicated road corridors for transportation of materials and doubling of railway lines besides setting up slurry pipeline facilities.

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