Steel sector status in India

Steel is one of the most important products in the modern world and forms the backbone to any industrial economy. India being one of the fastest growing economies in the world, and steel finding its extensive application right from construction, infrastructure, power, aerospace and industrial machinery to consumer products, the sector is of strategic importance to the country. The Indian steel sector has grown exponentially over the past few years to be the third largest producer of steel globally, contributing to about 2% of the country's GDP and employing about 5 lakh people directly and about 20 lakh people indirectly.

 

Untapped potential with a strong policy support becomes the ideal platform for growth. Owing to the strategic importance of the sector along with the need to have a robust and restructured policy in present scenario, the new NSP, 2017 became imminent. Though, National Steel Policy 2005 (NSP 2005) sought to indicate ways and means of consolidating the gains flowing out of the then economic order and charted out a road map for sustained and efficient growth of the Indian steel industry, it required adaptation in view of the recent developments unfolding in India and also worldwide, both on the demand and supply sides of the steel market.

Budget Economic Survey 2019: The government has estimated the country’s steel output to hit 128.6 million tonne (MT) by 2021 and consumption of the same to reach 140 MT by 2023, on the back of investments in infrastructure, construction and automobile sectors, according to the Economic Survey 2018-19. Crude steel production in 2018-19 stood at 106.56 MT, a growth 3.3 per cent over 103.13 MT in 2017-18. 

Currently, India’s per-capita consumption stands at only 69 kg, compared with the global average of 214 kg, it said. “It is estimated that the steel production in India will reach 128.6 MT by 2021 and its consumption will increase to 140 MT by 2023. “With huge investments in infrastructure, construction and automobile sector, steel demand and corresponding consumption is growing at an average of 7.4 per cent. This will lead steel production to go up to 255 million tonnes. 

National Steel Policy (NSP) 2017.

 

The new Steel Policy enshrines the long term vision of the Government to give impetus to the steel sector.  It seeks to enhance domestic steel consumption and ensure high quality steel production and create a technologically advanced and globally competitive steel industry.

 

Key features of the NSP 2017:

 

1.      Create self-sufficiency in steel production by providing policy support & guidance to private manufacturers, MSME steel producers, CPSEs

2.      Encourage adequate capacity additions,

3.      Development of globally competitive steel manufacturing capabilities,

4.      Cost-efficient production

5.      Domestic availability of iron ore, coking coal & natural gas,

6.      Facilitating foreign investment                  

7.      Asset acquisitions of raw materials &

8.      Enhancing the domestic steel demand.

 

The policy projects crude steel capacity of 300 million tonnes (MT), production of 255 MT and a robust finished steel per capita consumption of 158 Kgs by 2030 - 31, as against the current consumption of 61 Kgs. The policy also envisages to domestically meet the entire demand of high grade automotive steel, electrical steel, special steels and alloys for strategic applications and increase domestic availability of washed coking coal so as to reduce import dependence on coking coal from about 85% to around 65% by 2030-31.

Some highlights of New Steel Policy

 

Ø  The Indian steel sector has grown rapidly over the past few years and presently it is the third largest steel producer globally, contributing to about 2% of the country's GDP.  India has also crossed 100 MT mark for production for sale in 2016-17.

 

Ø  The New Steel Policy, 2017 aspires to achieve 300MT of steel-making capacity by 2030. This would translate into additional investment of Rs. 10 lakh Crore by 2030-31.

 

Ø  The Policy seeks to increase consumption of steel and major segments are infrastructure, automobiles and housing. New Steel Policy seeks to increase per capita steel consumption to the level of 160 Kgs by 2030 from existing level of around 60 Kg.

 

Ø  Potential of MSME steel sector has been recognised. Policy stipulates that adoption of energy efficient technologies in the MSME steel sector will be encouraged to improve the overall productivity & reduce energy intensity.

 

Ø  Steel Ministry will facilitate R&D in the sector through the establishment of Steel Research and Technology Mission of India (SRTMI). The initiative is aimed to spearhead R&D of national importance in iron & steel sector utilizing tripartite synergy amongst industry, national R&D laboratories and academic institutes.

 

Ø  Ministry through policy measures will ensure availability of raw materials like Iron ore, Coking coal and non-coking coal, Natural gas etc.  at competitive rates.

 

Ø  With the roll out of the National Steel Policy-2017, it is envisaged that the industry will be steered in creating an environment for promoting domestic steel and thereby ensuring a scenario where production meets the anticipated pace of growth in consumption, through a technologically advanced and globally competitive steel industry. This will be facilitated by Ministry of Steel, in coordination with relevant Ministries, as may be required.

Economic survey 2018-2019 points out that :

The Survey further said the domestic steel sector faced a number of issues in 2018-19, such as dependence on imported coking coal and import of high-grade steel. 

Some of the key challenges faced by the Indian steel industry are :

1)capacity expansion as the demand for steel is bound to rise with economic growth. 

2)High grade and value-added steel are used in power, defence and automobile which is currently imported.

3) “Difficulties in acquiring mining lease and high dependency on import of coking coal add to cost of steel production. High logistics costs also act as a major constraint,”. 

4)In the global scenario, the Survey said 2018-19 witnessed weakening of steel market fundamentals, and increase in trade friction with imposition of protectionist measures by the US and China, among other issues.

5) Pursuant to the imposition of trade restrictive measures by the US, the European Union and Canada, India’s exports have declined. 

The total exports, with the highest volume of 9.62 MT in 2017-18, fell to 6.36 MT during 2018-19. On the other hand, imports have gone up particularly from South Korea, Japan and ASEAN countries. 

India remained an importer of finished steel at 7.84 MT during 2018-19 as against 7.48 MT during 2017-18.

According to estimates, the steel sector directly contributes 1.4-2 per cent to India’s GDP and its weightage in the official Index of Industrial Production is 7.22 per cent and accounts for 7.53 per cent of the Wholesale Price Index.

 India is the second-largest producer of crude steel in the world after China, and third-largest consumer of the finished steel after China and US.

Factors that requires to establish steel factory? 

Iron industry is a feeder industry which provides raw materials to various other industries.

Inputs of iron industry: iron ore, coal, limestone, labour, capital, site and other infrastructure.

Processes: The process involves conversion of iron ore into steel. It is done in many stages.

 First of all, the raw material is put in a blast furnace for smelting. Iron is refined after smelting and made into steel. For making 1 tonne of steel, 4 tonne of iron ore is mixed with 1 tonne of limestone and 8 tonne of coal is used as fuel.

Steel is also called the backbone of modern industry. Almost everything used by us is either made up of steel or is made by machines which are made up of steel. Various items; right from an awl pin to a huge ship are made of steel.

JAMSHEDPUR

The first iron and steel plant in India was set up in 1907 at Jamshedpur. At that time, it was a small village named Sakchi; near the confluence of the rivers Subarnarekha and Kharkai in modern day Jharkhand. This plant is called Tata Iron and Steel Company (TISCO).

Location Advantages of Sakchi:

• It was only 32 km away from Kalimati station on the Bengal-Nagpur railway line.
• It was close to the deposits of iron ore, coal and manganese.
• It was near Kolkata which provided a large market.
• Presence of rivers ensured good supply of water for the factory.
• There are some large integrated steel plants and various mini steel plants in the Indian iron and steel industry.

Factors that require for establishing steel plant? 

Factors influencing the locations of Iron and steel industries:

• Raw material: Mostly large integrated steel plants are located close to source of raw materials, as they use large quantity of heavy and weight losing raw materials. Eg: Concentration of Iron and steel industry in Chota Nagpur region-Presence of Iron ore in this region. TISCO at Jamshedpur.
• Markets: As its heavy & bulky transportation cost is high. Therefore nearness to market is important especially for mini steel plants access to nearby markets is most important in order to minimize transportation cost. Also as mini steel plants rely on scrap metal they are mostly present in Maharashtra. Visakhapatnam steel plant located near the coast has excellent import-export facility
• Labour: Availability of cheap labour is also important. Eg: Rourkhela plant, Orisa; Bhilai steel plant in Chattisgarh, mostly in Chota Nagpur region
• Availability of electricity mostly hydro and water for cooling. Eg: Bokaro steel plant on banks of river Damodar, Visheshwarya steel plant, Kar near river Bhadra.

Dumping has affected India’s domestic steel industry:

• Low priced steel imports have been drastically increased in the recent past which has taken a toll on Indian steel industry
• Domestic steel companies are reeling under losses and even large firms have seen squeezing profitability. Eg: SAIL, Essar Steel complained the same
• It has also affected the banking industry as they account for big chunk of bad loans
• Lead to deterioration of performance of domestic industry

Steps taken by govt to tackle it:

• Imposition of anti dumping duty (5.3%-57%): Recently govt imposed five yr anti-dumping duties on stainless steel imports from China, EU, USA, South Africa etc
• Import tax: Import tax on few steel products have been imposed to contain losses of Indian steel companies. Safeguard duty on sheets of steel alloy was imposed recently.
• Govt in talks at WTO to increase freedom to raise tariffs to deal with import surges.

Iron & steel being basic industry provide raw materials for other industries, in order to avoid the spiraling effect and ensure fair trade, provide level playing field to domestic industry govt has taken steps to make big the Make in India initiative.