Steel Word2
Steel Word2
Steel Word2
India is the fifth largest producer of steel in the world. India Steel Industry has grown by leaps
and bounds, especially in recent times with Indian firms buying steel companies overseas. The
scope for steel industry is huge and industry estimates indicate that the industry will continue
will to grow reasonably in the coming years with huge demands for stainless steel in the
construction of new airports and metro rail projects. The government is planning a massive
enhancement of the steel production capacity of India with the modernization of the existing
steel plants.
Industry Statistics
Government targets to increase the production capacity from 56 million tones annually to 124
MT in the first phase which will come to an end by 2011 - 12. Currently with a production of 56
million tones India accounts for over 7% of the total steel produced globally, while it accounts
to about 5% of global steel consumption. The steel sector in India grew by 5.3% in May 2009.
Globally India is the only country to post a positive overall growth in the production of crude
steel at 1.01% for the period of January - March in 2009.
Export
About 50% of the steel produced in India is exported. India's export of steel during April -
December 2008 was 64.4 MT as against 9.7 MT in December 2007. In February 2009, steel
export increased by 17% to 12.6 MT from 10.8 MT in the same month last year. More than 50%
of steel from India is exported to China. The Government's decision to reduce export duty on
iron ore lumps from 15% to 5% has given a major boost to the export of steel.
Hurdles
Strengths
There are many strong points of the industry that makes it one of the leading names in the
global steel industry. The rate of labor wage in India is among one of the lowest in the world
thereby making large scale production feasible. The boom witnessed in the automobile industry
has ensured that the demand for steel is increasing gradually and will continue to do so in the
near future. There is huge manpower in India which is another reason why steel production in
India is high and the industry is doing pretty well both nationally and internationally.
Investments
Numerous steel companies some major projects in the pipeline to invest in India Steel industry.
Steel companies have earmarked more than 100 million USD for the setting up of sponge iron
units in Koppal and Bellary in Karnataka. As per Investment Commission of India more than 30
billion USD are in the pipeline for investment over the next five years.
The foreign direct investment in India being made in the steel industry of India has been picking
up in the recent years as a result of the immense growth potential of the country's steel
industry. In the Asian continent India is second only to China in terms of growth potential.
The gross domestic product of India has increased in the recent times.
This has sparked off the demand for production of steel in the country and the production has
increased as well. In the recent times India has been among the top producers of crude steel of
the world. All these factors are supposed to be important for attracting foreign direct
investment in the Indian steel industry.
The Indian national government also has been pretty liberal with their approach to the foreign
direct investment being made in the country. The Indian government has also relaxed the
various foreign investment laws. This has led to more international steel giants coming to India
to tap the abundant resources present in the country.
The increased interest shown by such companies has led to a growth in the steel industry of
India. Research and studies have shown that Orissa and Jharkhand would be the steel junctions
of India.
In the recent times these two states, which are located in the eastern part of India, have been
experiencing a number of steel projects in India. These projects have been funded by the Indian
national government, as well as, a number of companies that are forces to reckon with in the
context of the Indian steel industry.
Since, the government has also been taking steps to make sure that the production and
demand for Indian steel remains high in the international market, it may be assumed that an
increasing number of companies from around the world would be interested in the Indian steel
industry
The Indian steel industry enjoys a significant position in the global arena and the importance of
India in global crude steel production has grown significantly over the years.
The efforts to develop the steel industry in India started during the first five year plan but the
real developments started happening from 1980s onwards. The development of the sector can
be traced from the fact that although the Indian steel industry increased its production, but in
the 90s India imported huge quantity of steels to meet the growing demand of steel in the
country.
This scenario was totally changed in 2004 when India stood at the ninth position in terms of
crude steel production in the whole world and in 2006, India was at the seventh place among
the crude steel producing companies.
According to the released data by the International Iron and Steel Institute, contribution of
India in global crude steel production was about 40.9 million tonnes in 2005. This quantity was
increased by 7.6% in 2006 and the country produced nearly 44 million tonnes of steel.
This development of the industry was further speeded up in 2007 and the total production of
crude steel was nearly 50 million tonnes. This growth in the production has also helped the
country to gain the fifth position among global crude steel producing countries.
There are different factors that are responsible for this development. Firstly, the Indian
government has taken some reformatory steps that have helped the Indian steel industry to
grow at a good pace. The Indian government has set a target to increase the crude steel
production and till 2019-20, the Indian steel industry is expected to produce nearly 110 million
tonnes of crude steel.
Another important reason of this development is the deregulation factor. The national as well
as state governments in India are playing the role of a facilitator. At the same time, the national
policies regarding the steel industry are also reformed and this has encouraged investments in
the industry.
Much of these projects are taking place in the economically developing countries of the world
like India, China and Thailand. China is the place where a lot of construction is being done
nowadays and much of the construction is for the purpose of the Olympics to be held in 2008
and the Shanghai World Exposition of 2010.
Along with being one of the major users of steel, China is one of the major producers of steel as
well. During March, 2007 China produced a record 40.16 million tonnes of steel. The demand
for steel has gone up in the United States of America as well.
This may be ascertained from the fact that in 2007 the amount of steel used was 2.2% more
than what it was in 2006. Thus it may be ascertained that the supply and the demand for steel
is at their respective peaks. This bodes well for the Indian steel industry as India has plenty of
steel to meet up with both the domestic as well as international demand.
India has a lot of iron ores. This implies that India has a ready base for producing sufficient
amount of steel and the experts are also of the opinion that the Indian steel industry would
continue to grow in the coming years. In the recent times the production of steel has gone up in
the country from 17 million tonnes in 1990 to 36 million tonnes in 2003.
The Indian steel industry is trying to reach the 66 million tonnes mark in 2011. The high levels of
production would allow the Indian steel industry to establish a stronghold on a number of areas
like housing, construction, and ground transportation. The special steel produced by the Indian
steel industry is supposed to be used in high end engineering industries like generation of
power, fertilizers and petrochemicals.
The fact that India is not a voracious consumer of steel like some of the major economies like
China and the United States of America means that India would be able to use the surplus steel
it produces for exporting to other countries so that their demands are met. This would help the
Indian steel industry to be regarded as one of the most prominent steel industries if not the
leading one.
India has traditionally been one of the major producers of steel in the world. Till the 1990s the
steel industry of India was regulated and controlled by government policies.
After the economic reforms of the early 1990s, the Indian steel industry has evolved
significantly to conform to global standards.
India has set a vision to be an economically developed nation by 2020. The steel industry is
expected to play a major role in India's economic development in the coming years. The steel
industry of India has a very high growth potential and is expected to register significant growth
in the coming decades. India is expected to emerge as a strong force in the global steel market
in coming years.
The two major aspects that are expected to play a significant role in the growth of the steel
industry in India are -
Abundant availability of iron ore in the country
Steel production in India has grown from 17 MT in 1990 to 36 MT in 2003. It is expected that by
2011, the steel production in India will grow to 66 MT.
The major sectors where consumption of steel is expected to grow in the coming years are -
Construction
Housing
Ground transportation
The current scenario of the Indian steel industry indicates that there is huge growth potential in
this industry. The per capita-consumption of steel in India, according to latest available
estimates, is only 29 kg. This is much less compared to the global average of 140kg. The per
capita consumption level of developed nations like the United States of America is 400kg. In this
respect, one of the major initiatives that need to be taken is to focus on increasing the
consumption of steel in the rural areas of India. The potential for the growth of consumption of
steel in the rural areas of India for purposes like rural housing, rural infrastructure, etc is high
which needs to be tapped efficiently.
In order to realize the growth potential in the steel industry of India, it is essential to ensure
that the industry can remain competitive. One of the major aspects in this regard is the
availability of inputs. Shortage of inputs like coke has led to increase in costs earlier. Moreover
proper infrastructure facilities like transport infrastructure, power etc are of prime importance
in maintaining the competitiveness of the industry.
Most developed countries have regulations that are aimed to protect the domestic steel
industry. The Indian steel industry has comparatively much lesser protection through
regulations. Proper regulatory measures should be adopted by the government to protect the
domestic steel industry.
The steel industry in India has been moving from strength to strength and according to the
Annual Report 2009-10 by the Ministry of Steel, India has emerged as the fifth largest producer
of steel in the world and is likely to become the second largest producer of crude steel by 2015-
16.
Recently, Steel Minister, Mr Virbhadra Singh said that India will become the world's second-
largest steel producer by 2012, more than doubling its capacity to 124 million tonnes (MT) as
part of the push being given to assist overall infrastructure development.
Production
Steel production rose 4.2 per cent to reach 60 MT in 2009-2010, according to the Ministry of
Steel.
The National Steel Policy 2005 had projected an annual steel consumption growth of 7 per cent
based on GDP growth rate of 7-7.5 per cent and production of 110 MT of crude steel by 2019-
2020. Nonetheless, with the current rate of ongoing greenfield and brownfield projects, the
Ministry of Steel has projected that these growth trends are likely to be exceeded and it is
envisaged that in the next five years demand will grow at higher annual average growth rate of
over 10 per cent as compared to around 7 per cent growth achieved between 1991-92 and
2005-06.
Moreover, according to the ministry, the crude steel production capacity in the country by
2011-12 will be nearly 124 MT.
According to the Ministry of Steel, 222 memorandum of understanding (MoUs) have been
signed with various states for planned capacity of around 276 MT. Major investment plans are
in Orissa, Jharkhand, Chattisgarh, West Bengal, Karnataka, Gujarat and Maharashtra.
According to the Annual Report 2009-10 by the Ministry of Steel, domestic crude steel
production grew at a compounded annual growth rate of 8.6 per cent during 2004-05 and
2008-09.
Consumption
India's steel consumption rose 8 per cent in the year ended March 2010, over the same period
a year ago on account of improved demand from sectors like automobile, infrastructure and
housing. The country’s steel consumption increased to 56.3 MT in the 12 months to March
2010 from 52.3 MT in the previous year, as per the Ministry of Steel.
Investments
A host of steel companies have lined up major investment proposals. Furthermore, with an
expanding consumer market, the Indian steel industry is likely to receive huge domestic and
foreign investments.
The domestic steel sector has attracted a staggering investment of about US$ 238 billion,
according to the Minister of State for Steel, Mr A. Sai Prathap.
This consists of nearly 222 MoUs signed between the investors and various state governments
mostly in the states of Orissa, Jharkhand, Chhattisgarh and West Bengal.
Government Initiative
As per the Press Information Bureau, during 2009, the government took a number of fiscal and
administrative steps to contain steel prices. Central value added tax (CENVAT) on steel items
was reduced from 14 per cent to 10 per cent with effect from February 2009.
Moreover, in the Union Budget 2010-11, the government has allocated US$ 37.4 billion to the
infrastructure sector and has increased the allocation for road transport by 13 per cent to US$
4.3 billion which will further promote the steel industry.