discuss the growth of the modern iron and steel industries
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Introduction
India was the world’s second-largest steel producer@ with production standing at 106.5 MT in 2018. The growth in the Indian steel sector has been driven by 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 very modern with state-of-the-art steel mills. It has always strived for continuous modernisation and up-gradation of older plants and higher energy efficiency levels.
Indian steel industries are classified into three categories such as major producers, main producers and secondary producers.
Market Size
India’s finished steel consumption grew at a CAGR of 5.69 per cent during FY08-FY18 to reach 90.68 MT.
India’s crude steel and finished steel production increased to 103.13 MT and 104.98 MT in 2017-18, respectively.
In 2017-18, the country’s finished steel exports increased 17 per cent year-on-year to 9.62 million tonnes (MT), as compared to 8.24 MT in 2016-17. Exports and imports of finished steel stood at 0.72 MT and 1.12 MT, respectively, in FY20P(up to May).
Investments
Steel industry and its associated mining and metallurgy sectors have seen a number of major investments and developments in the recent past.
According to the data released by Department for Promotion of Industry and Internal Trade (DPIIT), the Indian metallurgical industries attracted Foreign Direct Investments (FDI) to the tune of US$ 11.30 billion in the period April 2000–March 2019.
Some of the major investments in the Indian steel industry are as follows:
As of December 2018, Vedanta Group is going to set up a one million tonne capacity steel plant in Jharkhand with an investment of Rs 22,000 crore (US$ 3.13 billion).
JSW Steel will be looking to further enhance the capacity of its Vijayanagar plant from 13 MTPA to 18 MTPA. In June 2018, the company had announced plans to expand the plant’s production capacity to 13 MTPA by 2020 with an investment of Rs 7,500 crore (US$ 1.12 billion).
Vedanta Star Ltd has outbid other companies to acquire Electrosteel Steels for US$ 825.45 million.
Tata Steel won the bid to acquire Bhushan Steel by offering a consideration of US$ 5,461.60 million.
JSW Steel has planned a US$ 4.14 billion capital expenditure programme to increase its overall steel output capacity from 18 million tonnes to 23 million tonnes by 2020.
In March 2019, ArcelorMittal was declared as the winning bidder to acquire Essar Steel for a consideration of Rs 42,000 crore (US$ 5.82 billion).
Tata Steel has decided to increase the capacity of its Kalinganagar integrated steel plant from 3 million tonnes to 8 million tonnes at an investment of US$ 3.64 billion.
Government Initiatives
Some of the other recent government initiatives in this sector are as follows:
An export duty of 30 per cent has been levied on iron ore^ (lumps and fines) to ensure supply to domestic steel industry.
Government of India’s focus on infrastructure and restarting road projects is aiding the boost in demand for steel. Also, further likely acceleration in rural economy and infrastructure is expected to lead to growth in demand for steel.
The Union Cabinet, Government of India has approved the National Steel Policy (NSP) 2017, as it seeks to create a globally competitive steel industry in India. NSP 2017 envisages 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steel consumption by 2030-31.
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$ 30 million).
The Government of India raised import duty on most steel items twice, each time by 2.5 per cent and imposed measures including anti-dumping and safeguard duties on iron and steel items.