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Centre plans to optimise movement of iron ore and steel


India wants to optimise movement of iron ore and steel under a plan for efficient logistics prepared by the Ministry of Steel. According to the plan, which is presently in draft stage, steel and iron ore together contribute to around 12% of the total freight movement in the country.

“The steel industry’s logistics cost represents around 16-18% of total revenue of steel players. This is significantly higher than best in class benchmarks which are at around 10-12% globally,” a person aware of the plan told ET. The plan highlights the need for cost efficiency in the Indian steel and iron ore sector, citing challenges such as insufficient rail availability and coastal shipment infrastructure gaps.

To address this anomaly, the centre is banking on more slurry pipelines, setting up logistics park at major steel handling locations, increase share of inland waterways and coastal shipping in steel movement, and raise stock of load efficient wagon types on the Indian Railways.

The modal share of the outbound steel products in India is skewed towards road and rail with negligible contribution of coastal shipment or national waterways. Around half of the country’s steel is transported by road compared to roughly 20-30% globally. The share of coastal and inland waterway movement of steel globally is much higher at around approximately 20%.
Large players in India move around 60-80% of their steel through the rail mode to key consumption centres. Smaller players, on the other hand, rely mainly on road, constituting roughly 80%-90% of their steel movement focusing largely on regional markets.This strategic plan is aimed at boosting growth, resilience, and sustainability in the industry. According to the draft plan, focus is on interoperability, resilience, and eco-consciousness, addressing infrastructure, processes, and digital transformation.These policy reforms aim to remove bottlenecks and support logistics expansion, while collaborative efforts will move across sectoral boundaries to achieve maximum efficiency through an optimized mix of transportation modes.


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