India is putting in place measures to fast-track economic growth. Core industries like steel will play a substantial part in this growth if the next decade has to really belong to India.
India´s steel industry has registered steady growth over the decades. It´s got to the point; it´s already the third largest in the world. It is now set to become the second largest producer of crude steel in 2015-16 with annual capacity projected to increase from 100 million tonne to about 112.5 million tonne. The industry could well be on its way to reach a target of 300 million tonne set by the government, by 2025. Contributing nearly two per cent of the country´s GDP and employing over 600,000 people, this growth so far has largely been below the radar. An industry devoid of a glamour quotient, the sector, of late, has been in the news for mostly the wrong reasons (failed projects, environmental clearance problems, Supreme Court mining ban, etc.).
All throughout, the blast furnaces have quietly gone about doing their jobs, serving as the engines of growth in an economy looking increasingly resurgent due to a regime change. To be sure, over the last one year since Prime Minister Narendra Modi assumed charge, not much has changed visibly. The steps taken though bode well for the health of the industry and display the long-term commit¡ment of the government. Some of these steps include the setting up of the Steel Research and Technology Mission of India (SRTMI) with an initial corpus of Rs 200 crore to spearhead R&D.
Also, a new national steel policy is to be implemented with adequate thrust placed on increasing India´s competitive advantage globally. The final draft of the National Steel Policy 2015 permits 100 per cent foreign direct investment (FDI) through the automatic route in the sector. The policy is now under finalisation.
A feasibility report to merge all the small public sector units (PSUs) is also being prepared by the Steel Ministry. The Joint Plant Committee (JPC) has already studied 300 districts, 1,500 villages, 4,500 manufacturers and 8,000 retailers, across 28 states and seven union territories, to assess rural demand and analyse the potential to increase steel consumption.
Also, the recent meeting jointly called by Union Ministers Arun Jaitley and Narendra Singh Tomar with secondary steel producers - the first ever with the downstream segment - underlines the government´s commitment to its roadmap of 300 million tonne by 2025.
In India, steel production is mostly by blast furnace based integrated steel producers who make steel using the basic ore. However, the contribution of secondary steel producers is about 55 per cent of the total steel produced, adopting the electric steel making process using steel scrap or from sponge iron. Hence, this meeting, recognising the importance of the secondary producers, is a big step forward.
With the government taking such measures to provide the requisite policy support, the industry can only benefit from rising domestic demand, growing investments to add capacity, strategic alliances, emphasis on technological innovations and entry of international companies. The cross border deals forged in the recent past are also helping Indian companies to benchmark their facilities and processes against global standards.
In the future, the ´Make in India´ initiative is expected to boost steel production, resolve problems related to mining, while demand growth can help the country on its way to becoming a steel manufacturing hub. The opportunity lies across all sectors, be it auto, capital goods, airports, railways, oil and gas, power and creating infrastructure assets.