India has one of the lowest per capita consumption of steel in the World despite the fact that iron and steel making is perhaps one of the oldest in the country. Recorded evidence show steel was produced 4000 years back in the country. India’s present per capita consumption of crude steel is one of the lowest and is far below 100 kg while the global average is little over 200 kg and that of China over 500 kg. So there is tremendous potential for increasing steel as requirement is only going to go up as India has the only place for large investment with huge domestic market and growing youthful middle class. There might however be some temporary hiccups because of difficult global economic situation.

India might be third largest steel producer in the World, next only to China and Japan, with production at slightly less than 100 million tonnes. But is is one-eighth of China’s production of over 800 million tonnes annually. With over $1 trillion investment expected in infrastructure in India, the demand for steel would only grow particularly in sectors like ports, airports, power, railways, shipping and so on.

So rightly there is enough investment taking place and government and public sector units are making all out efforts with the sector registering around seven per cent annually against global demand growth of less than 1 per cent. There is at the moment temporary problem of dumping of Chinese steel World over because of excess supply there. But all over the world including India, anti-dumping measures have been put in place to deal with the situation and hence it is being adequately tackled.

Though India produced around 95 million tonnes of steel last year, the imports have been around nine million tonnes, mostly of specialized steel not available in the country indicating it has not been badly hit because of cheap steel imports from China. However there was a hue and cry about steel dumping by some vested interests. Also India exports around six million tonnes of steel implying the net imports are only around three million tonnes, though perhaps of different variety. The demand for steel is around 100 to 110 million tonnes at the moment which is only expected to grow in the coming years.

The steel industry has sufficient potential for growth in the coming years though it was slow last year. Rightly therefore steps have been taken by steel industry in India particularly by the public sector undertakings to step up production as it cannot be increased overnight. It is not only time consuming but also requires huge investment, coal and iron ore linkages.

Steel Authority of India Limited (SAIL), which owns five integrated steel plants at Bhilai, Rourkela, Durgapur, Bokaro and Burnpur, besides interests in Salem Steel and Ferro alloy plant at Chandrapur has embarked upon ambitious expansion plans. The 24th largest steel producer in the World produces around 23.5 million tonnes. It is expected to increase production to 60 million tonnes by 2030. A recent survey showed that SAIL is one of India’s fastest growing public sector units. Steel Ministry, at present, has 12 public sector undertakings (PSUs) including the Steel Authority of India Limited (SAIL), National Mineral Development Corporation (NMDC), Kudramukh Iron Ore Company Limited (KIOCL), Rastriya Ispat Nigam Limited (RINL), Metallurgical and Engineering Consultants India Limited (MECON).

Until the 1990s, the iron and steel sector was by and large the exclusive preserve of only the public sector, the sole exception being TISCO. The economic reforms ensured more private players entered the sector making steel production not totally dominated by public sector units.

In 2014, the world crude steel production reached 1665 million tonnes (mt) and showed a growth of 1% over 2013. China remained the world’s largest crude steel producer in 2014 (823 mt) followed by Japan (110.7 mt). WSA has projected Indian steel demand to grow by 6.2% in 2015 and by 7.3% in 2016 as compared to global steel use growth of 0.5% and 1.4% respectively. Chinese steel use is projected to decline in both these years by 0.5%

Turning to domestic scenario the Indian steel industry has entered into a new development stage from 2007-08, riding high on the resurgent economy and rising demand for steel. Rapid rise in production has resulted in India becoming the largest producer of sponge iron in the world. An infrastructure investment of $1 trillion, a projected growth of manufacturing from current 8% to 11-12%, increase in urban population to 600 million by 2030 from the current level of 400 million, emergence of the rural market for steel currently consuming around 10 kg per annum buoyed by projects like smart cities, industrial clusters and food parks in rural areas, rural roads, rural housing, push to new railway lines and high speed freight and trains corridors, industrial corridors will push for demand for steel further. The National Steel Policy 2005 had envisaged steel production to reach 110 million tonnes (mt) by 2019-20. However, based on the assessment of the current ongoing projects, both in greenfield and brownfield, domestic crude steel capacity in the county is likely to be 140 mt by 2016-17 and has the potential to reach 149 mt if all requirements are adequately met.

With good monsoon this year, there is likely to be further spurt in demand for steel in rural areas. Also Prime Minister Narendra Modi’s thrust on make in India, startup and stand up India and MSME sector, there will be more demand for steel with manufacturing sector getting a shot in the arm. Also more investments flowing into defence manufacturing and heavy industries, the steel sector is likely to get further spurt. All these augur well for the Indian Steel Industry particularly public sector steel units, which are already in expansionary mode.

The steel sector, which contributes two per cent of GDP at present employing over six lakh people, is poised to leapfrog in the coming years despite global slowdown because of increasing domestic demand. Public Sector SAIL, which has already invested Rs 12,000 crore in the last couple of years on its expansion programme, proposed take its total production to at least 50 million tonnes by 2025 with in investment of additional Rs 1.5 lakh crore.

Private sector companies too are not far behind. The Steel Ministry is now reworking its plan to step up steel production in the country to 300 million tonnes by 2025 to become the second largest producer in the World. India has the largest Iron ore reserves in the World and the idea is to convert practically all iron ore production into manufacture of steel domestically to go up in the value addition ladder. India was once the largest exporter of iron ore, which is now gradually declining due to both increased production and the slowdown in China.

There are however some difficulties at the moment as global steel sector is not doing well and global steel prices are none too encouraging because of excess supply from China. Some of the bank borrowings by steel companies have become non-performing assets leading to their restructuring. But the lean phase seems to be over for the steel sector going by the results of steel companies, particularly public sector units in the last two quarters. They have started looking up clocking nearly 6-7 per cent growth, which indicates turnaround. With several infra projects kicking off in the country, the situation will only further improve leaving behind the difficulties the sector faced in the country last couple of years. (IPA Service)