ArcelorMittal, the world's leading steel and mining company, and the Steel Authority of India (SAIL), India's leading steel company, Friday, signed a Memorandum of Understanding (MoU) to set up an automotive steel manufacturing facility under a Joint Venture (JV) arrangement in India.

The MoU is the first step of a process to establish a JV between the two companies. The proposed JV will construct a state-of-the-art cold rolling mill and other downstream finishing facilities in India that will offer technologically advanced steel products to India's rapidly growing automotive sector. India is forecast to become the world's fourth largest automobile manufacturing nation by 2020, growing from approximately 3.5 million units today to over 7 million units. In response to the level of demand, and supported by the Indian Government's 'Make In India' programme, which has been designed to transform India into a global manufacturing hub, automotive manufacturers have been establishing an increased presence in the country.

Commenting on the announcement, Rakesh Singh, Steel Secretary to the Government of India, said, ''Increasing the availability of indigenously produced automotive steel would reduce India’s reliance on imports and provide the Indian steel industry and the automotive industry with a sustainable competitive advantage. India is expected to grow as a hub for automobile export manufacturing facilities to cater to the international market. This proposed collaboration between ArcelorMittal and SAIL is a positive and welcome step towards fulfilling the objectives of the ‘Make in India’ campaign launched by Prime Minister Narendra Modi.''

C.S. Verma, chairman, SAIL, added,  ''SAIL is on the verge of completing a comprehensive modernisation and expansion program to increase its hot metal capacity from 14 million tons per annum (MTPA) to 23.5 MTPA, with a quantum jump in production of value added steels. Furthermore, we have drawn up a Vision 2025 plan to further increase capacity to 50 MTPA. Product enrichment is an integral part of this plan and the MoU with ArcelorMittal will pave the way for a new chapter in the indigenous production of high-quality automotive steel in India. It will also aid a broader effort by SAIL to help fulfil the high-quality steel requirements of the rapidly growing infrastructure and manufacturing sectors in India.''

Shares of the company gained Rs 0.35, or 0.53%, to trade at Rs 66.50. The total volume of shares traded was 9,457 at the BSE (9.20 a.m., Monday).