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 civil 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 carmaker by 2020, up from fifth-largest currently.
Sharma also said state-owned Steel Authority of India and ArcelorMittal, the world's biggest steelmaker, were "fine-tuning" the terms of their agreements for a $1 billion 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 metric tons of auto-grade steel.
The Ministry of Steel has favored scrapping the 2.5 percent import tax on coking coal and ferro-nickel, key steelmaking raw materials, to keep a lid on input costs and Indian steelmakers 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 percent in the year to March 31, with higher purchases from Canada and the United States, 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, EU
Sharma said India is talking to US officials about easing quotas and tariff restrictions on Indian steel exports.
"The United States 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 Organization, 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.