Govt asks steel cos to invest in rural areas

KOLKATA: The Union ministry of steel has focused its attention on the rural sector with unprecedented ardour. In a letter sent to major steel producers, the ministry has urged to invest in setting up a distribution and logistics network to reach out to rural consumers in the region.

The ministry has been requesting domestic steel majors to focus on the rural segment. But this is perhaps the first attempt to formalise the system and widen the net of “socially sensitive” steel producers.

The government’s objective is to provide steel to rural consumers at prices that are similar to those in metros. To do so, main producers have been urged to subsidise the price of steel in rural areas by Rs 600 to Rs 1,000 per tonne by absorbing cost of transportation and wholesalers/distributors’ margin.

The ministry’s directive was spelt out in a letter sent out by Elias G, joint secretary ministry of steel on October 4, a copy of which is available with ET. It follows a resolution taken by main steel producers at a meeting on September 8, which was chaired by Union steel secretary RS Pandey.

Talking to ET, Elias said: “We had urged major producers to consider it and they in turn resolved to do so in last month’s meeting. The present system, in which rural consumers have to pay a higher price than urban consumers, is rather inequitable. The recent letter has been sent merely to nudge them into action.”