National Steel Policy, National Capital Goods Policy, Hydrocarbon Industry

National Steel Policy, National Capital Goods Policy, Hydrocarbon Industry

National Steel Policy 2017

  • Envisages a crude steel capacity of nearly 300 mt by 2030-31
  • Preference to domestically manufactured iron & steel products on Government procurement
  • Growth and development of domestic steel Industry under the Make in India scheme
  • reduce the inclination to use, low-quality low cost imported steel in Government funded projects

 

Public Procurement (Preference to Make in India), Order 2017 

  • To encourage ‘Make in India’ and promote manufacturing and production of goods and services in India
  • As National procurement policy envisage purchases of at least ₹2 trillion a year

 

Features
  • Government has defined local goods & services as those where at least 50% of value addition has been done in India
  • For the verification of the local content, self-certification would be necessary.
  • For procurement of goods of value less than ₹ 50 lakhs by government, only local suppliers would be eligible. Bids would be invited for procurement of goods of value more than ₹ 50 lakh
  • Condition of Reciprocity – Entities from countries where Indian suppliers are not allowed to participate or compete in bids for government procurement, may be restricted or excluded from public procurement tenders in India.

 

Significance 
  • promote manufacturing and production of goods and services in India
  • enhance income and employment
  • improve competitiveness of the domestic industries vis-a-vis foreign companies
  • In the long-term, this policy would also be a benefit towards raising manufacturing exports
  • would stimulate the flow of capital and technology into domestic manufacturing & services

 

Challenges 
  • Could be beneficial in the short term, but restrictions and protectionism in the long terms can hurt efficiency
  • Political interference and bureaucratic red tape in procurement may also hurt the procurement process

 


Capital Goods 

  • Any good (plant, machinery, equipment) that is used to manufacture other products (either directly or indirectly)
  • Capital Goods sector in India contributes 12% to the total manufacturing activity.

 

National Capital Goods Policy 

  • To ensure improvement in technology across sub-sectors + increase availability of skilled labours + promote growth and capacity building of MSMEs
  • Envisages increasing exports from the current 27% to 40% of production.
  • raising the share of domestic production in India’s demand from 60% to 80% to make the country an exporter of capital goods

 


Hydrocarbon Industry India

Need of new energy projects 
  • Demand is rising with economic growth but domestic production has been falling.
  • India imports more than 80 % of its crude oil and 40 % of its natural gas This leads to sufficient depletion of foreign currency reserves and lose control on domestic inflation.

 

Challenges 
  • Due to scarcity of land, there are protests at many places by farmer community against onshore oil projects.
  • Hydrocarbon Pricing – 
  • New Hydrocarbon exploration licensing policy promotes revenue sharing rather than production sharing model. This might discourage large investment in this sector because of higher risks in revenue sharing contract
  • Unlike crude oil, domestic gas prices are not market-linked but are formula-based
  • Sub-optimal capital allocation impedes the ability of the PSU companies to invest in future prospects.
  • Poor evacuation infrastructure in gas sector like poor pipeline connectivity

 

Government steps 
  • Fuel prices like petrol and diesel have been deregulated – improved profit margins of oil companies
  • Hydrocarbon Exploration Licensing Policy
  • Unified licensing policy: Exploration of all possible hydrocarbons in a block
  • Revenue Sharing instead of profit sharing – govt. will receive a share of the gross revenue
  • Pricing and marketing freedom for new gas production from difficult terrains.
  • Open acreage licensing: Bidders can select the exploration blocks on its own without waiting for the formal bid round.
  • Indian oil companies have signed contracts to explore shale gas in the United States
  • Renegotiation of long-term projects with major gas suppliers to boost foreign investment
  • Planning of strategic reserves in times of low oil prices

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