In Step With India's Growth Story

Growing steel demand is a credible index of a country’s socio economic development. India has now emerged as the world’s third largest producer of crude steel, up from its eighth position in 2003. Industry growth is driven by easy availability of low-cost raw materials and cost-eff ective labour. With gradual revival of the manufacturing and export sectors, India is expected to become the world’s second largest producer of crude steel in the next few years.

Government impetus

The Government of India is aiming to scale up steel production in the country to 300 MT by 2025 from current levels. The Government’s various policy reforms underpin a constructive medium term demand outlook.

Some of the focused initiatives in the sector comprise:

  • The Ministry of Steel is facilitating the 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 ₹ 200 crores
  • Government of India plans to auction eight coal blocks with reserves of 1,143 MT to steel and cement firms in January 2016
  • Government has planned Special Purpose Vehicles (SPVs) with four iron ore rich states i.e., Karnataka, Jharkhand, Odisha, and Chhattisgarh to set-up plants having capacity between 3 and 6 MTPA
  • A Project Monitoring Group (PMG) has been constituted under the Cabinet Secretariat to fast-track various clearances/resolution of issues related to investments of ₹ 1,000 crores or more
  • In the Union Budget 2016-17 the Government of India has proposed to spend ₹ 2,18,000 crores on roads and railways

Future growth prospects

India’s per capita consumption of total finished steel has risen from 51 kg in FY 2009-10 to about 59 kg in FY 2014-15. India produced 89.8 MT crude steel in FY 2015-16, a marginal increase of 0.9% since last year. In FY 2015-16, India consumed 80.5 MT of finished steel. Finished steel consumption growth stood at 4.5% in FY 2015-16. The country witnessed an unprecedented inflow of steel imports at predatory prices, which saw a significant increase in the last fiscal. However, the imposition of minimum import price on various steel products has provided some relief.

Increasing infrastructure investments, rapid growth in the industrial sector, rise in urban population, and emergence of the rural market for steel have the potential of raising the per capita steel consumption in the country. India’s steel sector contributes nearly 2% of the country’s gross domestic product (GDP) and employs over 6,00,000 people. India’s steel demand is showing signs of a rebound after the slowdown of the last two years. Cyclicality may be at work, but key demand trends are encouraging.

Steel scenario

Source: JPC and JSW Steel All figures are in million tonnes *Apparent finished steel consumption net of double counting effect