India was the world’s third-largest steel producer in 2016.@ The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to India’s manufacturing output.
The Indian steel industry is very modern with state-of-the-art steel mills. It has always strived for continuous modernisation and up-gradation of older plants and higher energy efficiency levels.
Indian steel industries are classified into three categories such as major producers, main producers and secondary producers.
India’s crude steel output grew 10.7 per cent year-on-year to 25.76 million tonnes (MT) during January-March 2017. India’s crude steel output during April 2017 grew by 5.4 per cent year-on-year to 8.107 MT.
India’s finished steel exports rose 102.1 per cent to 8.24 MT, while imports fell by 36.6 per cent to 7.42 MT in 2016-17. India’s steel exports rose 142 per cent in April 2017 to 747,000 tonnes over April 2016, while imports fell by 23 per cent to 504,000 tonnes in April 2017 over April 2016.
Total consumption of finished steel grew by 3.4 per cent year-on-year at 6.015 MT during April 2017.
Steel industry and its associated mining and metallurgy sectors have seen a number of major investments and developments in the recent past.
According to the data released by Department of Industrial Policy and Promotion (DIPP), the Indian metallurgical industries attracted Foreign Direct Investments (FDI) to the tune of US$ 10.33 billion in the period April 2000–March 2017.
Some of the major investments in the Indian steel industry are as follows:
- Jindal Stainless (Hisar) Limited, India’s largest stainless steel producer, has entered into the defence sector by signing an agreement with Defence Research & Development Organisation (DRDO) to manufacture high nitrogen steel (HNS) for armour applications.
- JSW Steel Ltd plans to set up two plants of 10 million metric tonnes each in Odisha and Jharkhand, which would require an estimated investment of Rs 40,000 crore (US$ 6.21 billion) per plant. The planned investments will double the company’s production capacity to 40 million metric tonnes by 2030.
- Tata Steel has signed an agreement to purchase a majority 51 per cent stake in Creative Port Development (CPDPL), which has a concession agreement with the Odisha government to develop a 10 million-tonnes-per-annum (MTPA) Subarnarekha port at Chamukh village in Balasore district of Odisha.
- ArcelorMittal SA is looking to set up a joint venture (JV) factory in India with state-owned Steel Authority of India Ltd (SAIL), to manufacture high-end steel products which could be used in defence and satellite industries.
Some of the other recent government initiatives in this sector are as follows:
- Steel demand is set to rise in the coming period owing to increased public sector spending by the Government of India.
- The Union Cabinet, Government of India has approved the National Steel Policy (NSP) 2017, as it seeks to create a globally competitive steel industry in India. NSP 2017 targets 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steel consumption by 2030.
- Metal Scrap Trade Corporation (MSTC) Limited and the Ministry of Steel have jointly launched an e-platform called ‘MSTC Metal Mandi’ under the ‘Digital India’ initiative, which will facilitate sale of finished and semi-finished steel products.
- The Ministry of Steel is facilitating setting up of an industry driven Steel Research and Technology Mission of India (SRTMI) in association with the public and private sector steel companies to spearhead research and development activities in the iron and steel industry at an initial corpus of Rs 200 crore (US$ 30 million).
India is expected to overtake Japan to become the world’s second largest steel producer soon, and aims to achieve 300 million tonnes of annual steel production by 2025-30.
India is expected to become the second largest steel producer in the world by 2018, based on increased capacity addition in anticipation of upcoming demand, and the new steel policy, that has been approved by the Union Cabinet in May 2017, is expected to boost India’s steel production.* Huge scope for growth is offered by India’s comparatively low per capita steel consumption and the expected rise in consumption due to increased infrastructure construction and the thriving automobile and railways sectors.
Exchange Rate Used: INR 1 = US$ 0.015 as of October 10, 2017.
References: Media reports, Press releases, Press Information Bureau (PIB), Joint Plant Committee (JPC)
Note: @ - Behind China and Japan,* – According to a report by S&P Global Platts
Disclaimer: This information has been collected through secondary research and Kohli & Kohli Law Associates is not responsible for any errors in the same