The steel sector in India is almost a century old, and exhibits significant economic importance due to rising demand by sectors such as infrastructure, real estate, and automobiles, in domestic as well as international markets. The level of per capita consumption of steel is an important determinant of the socio-economic development of the country.
The Indian steel industry is divided into primary and secondary sectors. The primary sector comprises a few large integrated steel providers producing billets, slabs and hot rolled coils. The secondary sector involves small units focused on the production of value-added products such as cold rolled coils, galvanised coils, angles, columns, beams and other re-rollers, and sponge iron units. Both sectors cater to different market segments.
The Indian steel industry has entered a new development stage since 2007–08 and is riding on the resurgent economy and the growing demand for steel. India’s 33 per cent growth in steel production in the last five years was second only to China among the top five steel producing nations, according to data by World Steel Association (WSA).
India is the fourth largest producer of crude steel and the largest producer of soft iron in the world. Presently, the Indian steel industry employs around 500,000 people while the per capita consumption in 2013 stood at around 57.8 kilograms. However, these figures are expected to rise with increased industrialisation throughout the country.
An improvement in overall business sentiment, the government's announcements on big-ticket investment in infrastructure and a post-monsoon pick-up in demand led India to post the fastest growth in steel production globally in October. At 8.5 per cent, India's pace of growth was also the fastest among the major steel producing countries,
For four consecutive years, India has been world's fourth largest steel maker. With 62.41 million tonnes (MT) output, the country remained the world's fourth largest steel producer in the first nine months of the current year. India's crude steel capacity stood at 101 MT in 2013-14. Significant thrust is being given on enhancing capacity by steel majors such as Steel Authority of India Ltd (SAIL), Tata Steel and Rashtriya Ispat Nigam Limited (RINL), who, among others, are going to come on stream in a year and a half from now. The government has set a target of trebling capacity to 300 MT by 2025-26.
India's steel production has gone up by 24 per cent during the last five years to 81.69 MT in 2013-14. Steel production was 65.84 MT in 2009-10. The production went up to 70.67 MT in 2010-11 and to 74.29 MT in 2011-12 and further to 78.42 MT in 2012-13.
According to the data released by Department of Industrial Policy and Promotion (DIPP), the Indian mining and metallurgical industries attracted foreign direct investments (FDI) to the tune of US$ 1,467.89 million and US$ 8,271.39 million, respectively, in the period April 2000–September 2014.
Steel production in the country has increased at a compound annual growth rate (CAGR) of 6.9 per cent over 2008–2012. The infrastructure sector accounts for close to 60 per cent of the country's total steel demand while the automobile industry accounts for 15 per cent.
The Government has set up an inter ministerial group (IMG) in the Steel Ministry for effective coordination and expediting implementation of various investment projects in the steel sector. SAIL and RINL, two state-run steel makers, have invested Rs 9,890 crore (US$ 1.61 billion) and Rs 1,512 crore (US$ 245.44 million) respectively in the last fiscal.
The steel industry and its associated mining and metallurgy has seen a number of major investments and developments in the recent past. Some of them are as follows:
The centre is aiming at rejuvenating the steel sector and removing the hurdles in steel production by scaling up production to 300 MT by 2025 from the 81 MT in 2013-14, according to Mr Narendra Singh Tomar, Minister for Steel and Mines, who also said that India is poised to move to second position in steel production in the next 10 years.
In another boost to the steel sector, the Union Government has decided to set up a research centre for the steel industry. The centre will spearhead research under the proposed ‘Steel Research & Technology Mission of India’ (SRTMI) to promote collaborative programmes in the sector. It is envisioned that the research will be done in priority areas covering best usage of available raw materials, conservation of natural resources, optimum energy conservation, minimum emissions leading to innovations, development of design, engineering and manufacturing facilities of key steel plant equipment.
The Government of India plans to set up a steel plant under SAIL at Bayyaram in Khamman District of Telangana, according to Mr Narendra Singh Tomar, Union Minister of Steel and Mines. A feasibility study is already underway and soon after its completion, a site would be selected for plant and funds allocation.
Some of the other recent government initiatives in this sector are as follows:
The demand for steel in India is expected to rise by 4-5 per cent this year and will touch a compounded annual growth rate (CAGR) of 15 per cent after FY17. Given the government's high focus on jump starting stalled projects, followed by pushing large flagship projects, including the freight and industrial corridors, it is expected that India will begin moving back on the path of materials intensive growth by the end of this year.
Also, the recently released Union Budget 2014–15 has paved the way for the development of the Indian steel sector with proposals for the construction of 100 smart cities and changes in the MMRD Act. India’s ranking in the global list for production of crude steel is all set to improve with increasing demand for domestic consumption in the years to follow. As per Tata Steel, India's steel sector is anticipated to witness investment of about Rs 2 trillion (US$ 32.46 billion) in the coming years.
Exchange Rate: INR 1 = US$ 0.0162 as on January 21, 2015
References:Media reports, Press Releases, Press Information Bureau, Department of Industry Policy and Promotion, Ministry of Steel, Confederation of Indian Industries