The government’s focus to increase the pace of infrastructure development has also generated a huge demand of steel
The Indian steel industry is expected to touch new milestone in the coming years as it jumps to become the second largest producer. Presently, India is the world’s third-largest producer of crude steel. The Indian steel industry is seeing copious opportunitiesfrom various sectors including automotive, capital goods, infrastructure, airports, railways, oil & gas, power and rural India. 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. The government’s focus to increase the pace of infrastructure development has also generated a huge demand of steel. The infrastructure sector accounts for 9 per cent of steel consumption and expected to increase 11 per cent by 2025-26. Expansion of existing airports and the construction of new airports would likely to grow the consumption of steel more than 20 per cent over next few years.
India’s crude steel capacity reached 109.85 Million Tonnes (MT) in 2014-15, a growth of 7.4 per cent. Production of crude steel grew by 8.9 per cent to 88. 98 MT. Total finished steel production for sale increased by 5.1 per cent to 92.16 MT. Consumption of total finished steel increased 3.9 per cent to 76.99 MT.
India produced 7.34 MT of steel in the month of September 2015, which was nearly equal to the country’s steel production in September 2014.
The steel sector in India contributes nearly two per cent of the country’s gross domestic product (GDP) and employs over 600,000 people. The per capita consumption of total finished steel in the country has risen from 51 Kg in 2009-10 to about 59 Kg in 2014-15. India’s steel consumption for FY 2015-16 is estimated to increase by 7 per cent, higher than 2 per cent growth last year, due to improving economic activity, as per E&Y’s ‘Global Steel 2015-16’ report.
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$ 8.7 billion, respectively, in the period April 2000–September 2015.
Some of the major investments in the Indian steel industry are as follows:
- National Mineral Development Corporation (NMDC) has planned to invest Rs 40,000 crore (US$ 6.1 billion) in the next eight years to achieve mining capacity of 75 million tonnes per annum (MTPA) by FY2018-19 and 100 MTPA by FY2021-22, compared to 48 MTPA current capacity.
- Posco Korea, the multinational Korean steel company, has signed an agreement with Shree Uttam Steel and Power (part of Uttam Galva Group) to set up a steel plant at Satarda in Maharashtra.
- Iron ore output in India is expected to increase by 25 per cent to 153 Million Tonnes in FY 2016, which in turn will help reduce iron ore imports by two-thirds to five Million Tonnes, SAIL plans to invest US$23.8 billion to increase the steel production to 50 MTPA by 2025.
- ArcelorMittal, world’s leading steel maker, has agreed a joint venture with Steel Authority of India Ltd (SAIL) to set up an automotive steel manufacturing facility in India.
- Iran has evinced interest in strengthening ties with India in the steel and mines sector, said ambassador of the Islamic Republic of Iran, MrGholamreza Ansari in his conversation with Minister of Steel and Mines, MrNarendra Singh Tomar.
- Public sector mining giant NMDC Ltd will set up a greenfield 3-million tonne per annum steel mill in Karnataka jointly with the state government at an estimated investment of Rs 18,000 crore (US$ 2.8 billion).
- JSW Steel has announced to add capacity to make its plant in Karnataka the largest at 20 MT by 2022.
The Indian steel industry is poised to grow as it will see strong demand from various sectors, which are further backed up by government policies. The Government of India is aiming to scale up steel production in the country to 300 MT by 2025 from 81 MT in 2013-14.The Ministry of Steel has announced to invest in modernisation and expansion of steel plants of Steel Authority of India Limited (SAIL) and RashtriyaIspat Nigam Limited (RINL) in various states to enhance the crude steel production capacity in the current phase from 12.8 MTPA to 21.4 MTPA and from 3.0 MTPA to 6.3 MTPA respectively.
The Minister of Steel & Mines, MrNarendra Singh Tomar, has reiterated commitment of Central Government to support the steel industry to reach a production target of 300 Million Tonne Per Annum (MTPA) in 2025.
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$ 31.67 million).
Some of the other recent government initiatives in this sector are as follows:
- Government of India plans to auction eight coal blocks with reserves of 1,143 million tonnes to steel and cement firms in January 2016, as per coal secretary Mr Anil Swarup.
- Government has planned Special Purpose Vehicles (SPVs) with four iron ore rich states i.e., Karnataka, Jharkhand, Orissa, and Chhattisgarh to set up plants having capacity between 3 to 6 MTPA.
- SAIL plans to invest US$ 23.8 billion for increasing its production to 50 MTPA by 2025. SAIL is currently expanding its capacity from 13 MTPA to 23 MTPA, at an investment of US$ 9.6 billion.
- A Project Monitoring Group (PMG) has been constituted under the Cabinet Secretariat to fast track various clearances/resolution of issues related to investments of Rs 1,000 crore (US$ 152 million) or more.
- To increase domestic value addition and improve iron ore availability for domestic steel industry, duty on export of iron ore has been increased to 30 per cent.
