Steel is crucial to the development of any modern economy and is considered to be one of the backbones of human civilisation. The level of per capita consumption of steel is treated as an important index of the level of socio-economic development in a country.
From only three steel plants, a few electric arc furnace-based plants and a mere one million tonne (MT) capacity status at the time of Independence, India is now the fourth largest crude steel producer in the world and the largest producer of sponge iron.
Presently, steel contributes to nearly two per cent of the gross domestic product (GDP) and employs over 500,000 people. The total market value of the Indian steel sector stood at US$ 57.8 billion in 2011 and is expected to touch US$ 95.3 billion by 2016. India's per capita steel consumption stood at 57.8 kilograms in 2013, according to a World Steel Association report and is expected to rise with increased industrialisation throughout the country.
India is slated to become the second-largest steel producer in the world by 2015. Steel production in the country has increased at a compound annual growth rate (CAGR) of 6.9 per cent over 2008-2012.
India's real consumption of total finished steel grew by 0.6 per cent year-on-year in April-March 2013-14 to 73.93 MT, according to the Joint Plant Committee (JPC), Ministry of Steel.
Increasing demand by sectors such as infrastructure, real estate and automobiles at home and abroad has put India on the world map. The construction sector accounts for around 60 per cent of the country's total steel demand while the automobile industry accounts for 15 per cent.
The steel industry and its related metallurgy and mining industries have witnessed quite a few investments and developments in the recent past. Some of the notable investments are as follows:
JSW Steel is also set to acquire WelspunMaxsteel for about Rs 1,100 crore (US$ 182.98 million) in a move aimed at sourcing cheaper raw material, bringing down production cost and enhancing its presence in the northern and western markets.
Ministry of Steel, Government of India, is considering setting up a strong research and development (R&D) mission/centre, virtual or otherwise, to step up innovative research and technology development in the country's steel industry.
The Centre's Steel Development Fund (SDF) and Plan Scheme presently provide financial assistance for R&D in the sector. Under the SDF scheme, 82 R&D projects have been approved with total project cost of Rs 677 crore (US$ 112.61 million) where in SDF assistance is Rs 370 crore (US$ 61.54 million). Under the Plan Scheme, eight projects have been approved with a total cost of Rs 123.27 crore (US$ 20.51 million) where in government assistance is Rs 87.28 crore (US$ 14.51 million).
In order to increase industrial activity, the Government of India, through the Ministry of Steel, has signed Memorandums of Understanding (MoUs) with all the major steel producing Public Sector Undertaking (PSU) companies such as SAIL and Rashtriya Ispat Nigam Ltd (RINL). These will help to direct the companies to achieve targets and benefit the sector as a whole.
The liberalisation of the industrial policy and other initiatives taken by the government have spurred the growth of the private sector in the steel industry. While the existing units are being modernised or expanded, a large number of new steel plants have also come up in different parts of the country based on cost-effective and state of-the-art technologies. In the last few years, the rapid and stable growth of the demand side has also prompted domestic entrepreneurs to set up fresh greenfield projects in different states of India.
With the increase in global population, there is a greater need for steel to build public-transport infrastructure. Emerging economies will continue to drive demand as these countries require a significant amount of steel for urbanisation and industrialisation purposes. India's steel sector is anticipated to witness investment of about Rs 2 trillion (US$ 33.26 billion) in the coming years, as per Tata Steel.
Exchange Rate: INR 1 = US$ 0.0166 as on July25, 2014
References: Media reports, Press Releases, Press Information Bureau, Department of Industry Policy and Promotion, Ministry of Steel, Confederation of Indian Industries