Mumbai: The cabinet late on Wednesday cleared a policy for the domestic steel sector which plans to treble India’s steel production capacity by 2030 and help the country meet its steel requirements. But how far can this policy go in reviving Indian steel makers, who in recent years have been hurt by an unprecedented influx of steel imports from countries such as China, Japan and South Korea?

On Thursday, shares of large steel makers Tata Steel Ltd, JSW Steel Ltd and Jindal Steel and Power Ltd were little changed on the BSE from their Wednesday close.

The policy document does not indicate how the government plans to achieve the stated goals, brokerage B&K Securities wrote in a note to clients on Thursday.

“Majority of steel capacity is owned by private sector which is under pressure with respect to profitability (given the global overcapacity we do not expect significant improvement in near to medium term; though anti-dumping duty would protect Indian mills’ profitability to certain extent) thus, until things improve, major capex from them looks unlikely,” the note said.

The National Steel Policy 2017 projects crude steel production capacity of 300 million tonnes (mt) by 2030-31 from about 100-120 mt currently and per capita consumption of 158kg of finished steel as against the current consumption of 61kg. The policy also sees an increase in domestic availability of washed coking coal by 2030-31.

The government has in the last year taken a few protectionist steps for the domestic steel sector. In February 2016, it introduced minimum import duty (MIP) on certain steel products for about a year to protect the domestic industry from cheaper imports. In the following months, it also introduced an anti-dumping duty on some steel products from China and European countries and this year extended that duty on products from China by five years.

“Per se, it (the policy) is positive for the steel sector and from point of view of infrastructure creation that the government aspires for in the period,” said Abhisar Jain, an analyst at Centrum Broking Pvt. Ltd.

“The policy also looks to increasing the per capita consumption of steel to 160 kgs from current consumption of 60 kgs, highlighting that they want to promote steel consumption in infrastructure and housing sectors. But obviously, implementation, approvals and other factors need to fall in place in subsequent years,” Jain said.

India has added steel capacity at the rate of 55 mt a year in the last 10 years, making the new projections exorbitant, said a brokerage analyst, asking not to be named as he is not authorized to speak to reporters. “There is no immediate relief for steel capacity which is under stress or up for sale.”

Large steel manufacturers, however, are positive.

The policy is the latest step by the Indian government that can put the domestic steel manufacturers in a sweet spot of growth, and demand can grow by 5-6% in the current year, according to Ravi Uppal, group chief executive at JSPL.

Uppal said JSPL is commissioning a 6 million tonne steel plant in Angul, Odisha, in a few weeks. “We now feel more confident that the government is backing up the industry.”

“There is a lot of headroom for us to grow because steel consumption in India is 60 kg compared with the global average of 210 kg… For achieving 160 kg the current capacity is inadequate and the government is taking a two-pronged action—one is stimulating growth of demand and other is backing it up with adequate supply… If everything comes from China and Korea we will miss the opportunity of growing our own steel industry,” Uppal said.

The country’s focus on infrastructure-led growth will not only support the demand growth of steel but will also help companies achieve cost efficiencies, said T.V. Narendran, managing director, Tata Steel India and South-East Asia.

“The new policy would help in realigning the enablers in paving the way for India to realize its potential by creating modern infrastructure and meeting the aspirations of its young population. We look forward to the implementation of the policy and the forecast growth of the steel consuming sectors while we work with the government to address supply-side issues like raw material availability and debottlenecking logistics constraints in realising the goals of the policy,” Narendran said.

JSW Steel did not immediately respond to Mint’s requests for comments.