STEEL DEVELOPMENT FUND

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BACKGROUNDER

Steel Development Fund (SDF) was created in 1978, with the approval of the Cabinet for modernisation, rehabilitation and development of the steel industry. Joint Plant Committee (JPC), set up under the Iron and Steel (Control) Order, 1956, was authorised by the Government to add an element to the ex-works prices of main producers. The scope of the fund was subsequently expanded to cover any new investment by the main producers for expansion of capacity, R&D, modernisation, payment of rebate to Small Sale Industries Corporations (SSCIs) on supplies received from main producers and for meeting the expenditure on the Economic Research Unit (ERU) of the JPC.

The SDF levy was withdrawn in April, 1994. This decision of the Government was based on the representations made by the main producers for discontinuation of SDF levy after de-regulation of steel prices with effect from January 16, 1992.

In July, 1997 the Government examined the proposal for utilisation of SDF and decided as follows:-

1. The existing corpus of the Steel Development Fund (SDF) which is in the form of loans advanced to the Main Producers will continue to be recycled to them.
2. Interest on the fresh loans (that is loans recycled from now hence) may be uniformly charged at 8 percent per annum to be reviewed every year.
3. The entire proceeds from interest may be kept in deposit in the Public Account of India, on which interest at a nominal rate will be paid.
4. The annual utilisation of the interest proceeds deposited in the Public Account may be as follows:-

1. An expenditure not exceeding Rs.150 crore may be incurred exclusively on research and development in steel in the country.
2. A further expenditure not exceeding Rs. 50 crore may be incurred on:

1. assistance to the Small Scale Industries Corporations engaged in distribution of steel.
2. environment and pollution control in the iron and steel sector.
3. export promotion and market development (not exceeding Rs. 5 crore in a year.)
4. expenditure on Economic Research Unit, JPC.
5. Expenditure on Prime Minister's trophy given to the best Integrated Steel Plant each year.

1. A Research & Technology Mission will be formed in the form of a Society registered under the Societies Registration Act, 1860 with a full time Director. An Empowered Committee with Secretary (Steel) as Chairman will be constituted for approving specific research programmes and to give overall direction to research in the steel sector. The Committee shall function under the overall supervision and guidance of the Committee of Secretaries on Science & Technology.
2. The SDF corpus may continue to be managed by the SDF Managing Committee. The terms and conditions under which loans and financial assistance may be given will continue to be determined by the SDF Managing Committee as hitherto subject to 1 to 4 above.

As against an annual commitment of Rs. 45 crore, SAIL has paid only a sum of Rs. 8 crores in cash during the period from April 1,2001 to February 28, 2002. After adjusting claims of Rs. 10.70 crore towards SSICs rebates, the dues payable by SAIL as on February 28, 2002 is Rs. 381.67 crore.

During the period from April 1, 2001 to February 28, 2002, Tata Iron & Steel Company (TISCO) has paid only a sum of Rs. 8 crores. As on February 28, 2002 the company has to pay SDF interest amounting to Rs. 143.46 crore.