The country’s largest steelmaker, Tata Steel Ltd, is banking on India to keep its head above water and weather the economic downturn.

While it expects steel prices to hover at around half of last year’s peaks, the company is confident it will expand sales in India by one-fifth in the current fiscal. Managing director B. Muthuraman said, “We plan to sell 20% more this year than what we did last year. And I do believe that steel demand will grow by about 5-6% this year in the Indian market, which is not bad at all.”

Steelmakers are trying to cut costs amid a steep decline in demand as advanced economies battle a recession. Tata Steel’s Corus unit said on Friday that it may shut a plant in north-eastern England, putting about 2,000 jobs at risk, after a group of buyers abandoned a purchasing contract. Tata Steel admitted that its business in the UK and other parts of Europe have taken a major hit, and confirmed that it will have to cut jobs as part of its efforts to weather the crisis.

“The rest of the world is in difficulty,” Muthuraman said. “There will be job losses. Job reductions are happening throughout the world in the steel industry. In Europe, we have aligned production to market demand and temporarily closed some units.”

This exercise saved the firm around $650 million (around Rs3,200 crore) in the second half of the last year, cash that should come in handy when it implements its plans to set up new production capacities of up to 3 million tonnes in India by 2012.

This story appeared on Mint, as part of the content tie-up between CNBC-TV18 and WSJ Mint. Read the original here.