The sector needs more regulation
Till now, the government has tried to control the activities in the sector through imposition of export tax and export bans. But such short-term measures send wrong signals to new entrants and big players like Mittal Steel and Posco. In absence of new entrants, the sector would continue to see lobbying and a demand supply gap, which would have direct impact on prices. To be able to regulate prices, long-term planning is required. Agrees Ashok Jainani, VP Research, KSL Securities Ltd. As per him, “The government should focus on controlling the root-cause i.e. iron-ore prices catapulted by 150% from $60 to $150, which have high margins of around 80% and considerably high costing raw materials like coking coal and power prices.”
But the first step in the right direction would be to set up a Steel Regulatory Body. The work of the body would be to keep an eye on the sector. This would stop lobbying and would also make sure that even the government gets to negotiate. The government has to come up with best option to gets itself out of the steel muddle and protect the ultimate sufferers, the common man.
Till now, the government has tried to control the activities in the sector through imposition of export tax and export bans. But such short-term measures send wrong signals to new entrants and big players like Mittal Steel and Posco. In absence of new entrants, the sector would continue to see lobbying and a demand supply gap, which would have direct impact on prices. To be able to regulate prices, long-term planning is required. Agrees Ashok Jainani, VP Research, KSL Securities Ltd. As per him, “The government should focus on controlling the root-cause i.e. iron-ore prices catapulted by 150% from $60 to $150, which have high margins of around 80% and considerably high costing raw materials like coking coal and power prices.”
But the first step in the right direction would be to set up a Steel Regulatory Body. The work of the body would be to keep an eye on the sector. This would stop lobbying and would also make sure that even the government gets to negotiate. The government has to come up with best option to gets itself out of the steel muddle and protect the ultimate sufferers, the common man.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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