By Nidhi Verma and Neha Arora
NEW DELHI (Reuters) – India has asked domestic oil and gas companies to raise the share of domestically manufactured steel they use in future infrastructure projects worth billions of dollars to cut its dependence on imports, boost the economy and create jobs.
Prime Minister Narendra Modi’s government is pushing for local manufacturing to resuscitate the economy, which is likely to contract by about 5% this fiscal year.
India, the world’s third-biggest oil importer and consumer, plans to invest about $160 billion by 2025-26 in expanding refining capacity, building gas infrastructure and ramping up exploration and production.
Federal Minister for Steel and Oil Dharmendra Pradhan on Tuesday urged officials from the two sectors to prepare a roadmap to boost the oil and gas industry’s share of domestic steel consumption.
State-run Engineers India Ltd anticipates India’s oil and gas sector will consume 50 million tonnes of steel in next 15 years.
The country is the world’s second-biggest producer of the metal but relies on costly overseas purchases for some high-end products.
“Domestic players should rise to the occasion so that cost does not escalate in our efforts to promote localization of the supply chain,” Pradhan said in a webinar.
Indian Oil Corp, the country’s top crude oil refiner, said on Tuesday it aims to procure 161.5 billion rupees ($2.1 billion) worth of local steel in the next three years to expand refining capacity and build gas infrastructure.
The company plans to procure 400,000 tonnes of steel, plus 5,500 tonnes of plates for tank maintenance, Chairman Sanjiv Singh said. However, he said it has to import some varieties of steel that local firms rarely make at competitive rates.
Steel Authority of India Chairman Anil Kumar Chaudhary said while the cost of producing specialised grades was higher, economies of scale meant that a rise in orders would bring it down.
“We can develop any kind of steel,” he said.
($1 = 76.0968 Indian rupees)
(Reporting by Nidhi Verma; Editing by Jan Harvey)