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
- 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.
- 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
- 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
- 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.
- 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
- 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