The industrial revolution saw an exponential demand in metals and to meet that demand, the metal industry flourished explosively. And the demand is ever-growing. One metal that has changed the industry is Steel and as of October 2021, India was the world’s second-largest producer of crude steel, with an output of 9.8 Metric tons (MT). In FY21, the production of crude steel and finished steel stood at 102.49 MT and 94.66 MT, respectively.
On a similar line, the India Pavilion at EXPO 2020, Dubai is all set to host ‘Steel Week’ from 11th March 2022. The Pavilion will highlight the expertise of the Steel sector in India and showcase an array of opportunities as well as business potential in India’s steel sector. Let us dig deep into the Steel industry of India and how it is contributing to the nation’s growth.
The rising demand for Steel
The rising demand for Steel in the world has predicted that in FY22 crude steel production in India is estimated to increase by 18%, to reach 120 million tonnes. The growth in the Indian steel sector has been driven by the domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to India’s manufacturing output.
The Indian steel industry is modern with state-of-the-art steel mills. The nation has continuous modered old plants and upgraded them to higher energy efficiency levels. To put things in perceptive, the Indian steel industry is classified into three categories – major producers, main producers and secondary producers.
Market Size of the Indian Steel industry
The market size of Steel in India is huge. According to available data, the production of crude steel and finished steel in FY21 stood a 102.49 MT and 94.66 MT, respectively. According to CARE Ratings (Credit Analysis & Research Ltd), crude steel production is expected to reach 112-114 MT (million tonne), an increase of 8-9% YoY in FY22. The consumption of finished steel stood at 93.43 MT in FY21. Between April 2021 and September 2021, finished steel consumption stood at 49.11 MT. In May 2021, finished steel production stood at 7.8 MT and in June 2021, SAIL’s crude steel production stood at 1.30 MT and saleable steel production was 1.27 MT.
The Exports and imports of finished steel stood at 7.75 MT and 2.37 MT, respectively, in FY22 (until September 2021). In April 2021, India’s export rose by 121.6% YoY, compared with 2020. In FY20, India exported 8.24 MT of finished steel.
Government Initiatives in Indian Steel Industry
The central government’s call for Aatmanirbar Bharat has given a whole new dimension to the nation. Similarly, in the Steel sector, the government has worked tirelessly to support MSMEs and large producers of Steel. Some of the recent Government initiatives in the Steel Industry are as follows:
- In October 2021, the government announced guidelines for the approved speciality steel production-linked incentive (PLI) scheme. In the same month, India and Russia signed an MoU to carry out R&D in the steel sector and produce coking coal (used in steelmaking).
- In July 2021, the Union Cabinet approved the production-linked incentive (PLI) scheme for speciality steel. The scheme is expected to attract investment worth ~Rs. 400 billion (US$ 5.37 billion) and expand speciality steel capacity by 25 million tonnes (MT), to 42 MT in FY27, from 18 MT in FY21.
- In June 2021, Former Minister of Steel & Petroleum & Natural Gas, Dharmendra Pradhan addressed the webinar on ‘Making Eastern India a manufacturing hub with respect to metallurgical industries’, organised by the Indian Institute of Metals. In 2020, ‘Mission Purvodaya’ was launched to accelerate the development of the eastern states of India (Odisha, Jharkhand, Chhattisgarh, West Bengal and the northern part of Andhra Pradesh) through the establishment of an integrated steel hub in Kolkata, West Bengal. Eastern India has the potential to add >75% of the country’s incremental steel capacity. It is expected that of the 300 MT capacity by 2030-31, >200 MT can come from this region alone.
- In June 2021, JSW Steel, CSIR-National Chemical Lab (NCL), Scottish Development International (SDI) and India H2 Alliance (IH2A) joined forces to commercialise hydrogen in the steel and cement sectors.
- Under the Union Budget 2020-21, the government allocated Rs. 39.25 crore (US$ 5.4 million) to the Ministry of Steel. The budget’s focus is on creating infrastructure and manufacturing to propel the economy. In addition, enhanced outlays for key sectors such as defence services, railways, and roads, transport and highways would provide impetus to steel consumption.
- In January 2021, the Ministry of Steel, Government of India, signed a Memorandum of Cooperation (MoC) with the Ministry of Economy, Trade and Industry, Government of Japan, to boost the steel sector through joint activities under the framework of India–Japan Steel Dialogue.
- The Union Cabinet, approved the National Steel Policy (NSP) 2017, as it intends to create a globally competitive steel industry in India. NSP 2017 envisage 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steel consumption by 2030-31.
- 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 Rs. 200 crores.
- The Government of India raised import duty on most steel items twice, each time by 2.5% and imposed measures including anti-dumping and safeguard duties on iron and steel items.
Road ahead
The National Steel Policy, 2017 envisages 300 million tonnes of production capacity by 2030-31. The per capita consumption of steel has increased from 57.6 kgs to 74.1 kgs during the last five years. The government has a fixed objective of increasing rural consumption of steel from the current 19.6 kg/per capita to 38 kg/per capita by 2030-31. As per Indian Steel Association (ISA), steel demand will grow by 7.2% in 2019-20 and 2020-21. The road ahead for the Indian Steel industry is full of opportunity, with a huge scope of employment generations and growth of the nation.
