After recently becoming the net exporter of steel for the first time, the Indian steel sector is now poised to grab the second position from Japan as the largest steel producer by 2018-19.
As per projections by Indian government, the India marked record level production to meet the increasing demand in infrastructure.
“It is a matter of pride for every Indian steel stake holders to see the industry perform at a record growth rate. The rapid progress in infrastructure development and adherence to government’s initiatives such as ‘Make in India’ has boosted steel production across the country,” says Nikunj Turakhia, president of Steel Users Federation of India (SUFI).
India become the net exporter of steel in financial year 2016-17 as imports fell gradually. Overtaking the imports, exports jumped by 102.1 per cent in 2016-17 to 8.24 million tonne (MT), as compared to 4.07 MT in 2015-16, according to a steel ministry report.
The slowdown in the sector was owing to the consumption demand which saw a steep fall. However, going forward, the industry is optimistic of an uptake. The country’s top suppliers such as Tata Steel, Steel Authority of India Ltd (SAIL) and JSW Steel Ltd ended up with record outputs in 2016-17.
SAIL sold 13.143 MT of steel in 2016-17, posting 12 per cent growth in production and three fold rise in exports. On a similar note, JSW Steel’s output of was up by 26 per cent, with the crude steel output of 15.80 MT.
The budget for the fiscal outlines an investment of Rs.4 trillion on infrastructure to accelerate the sluggish consumption demand. Recently, steel minister Chaudhary Birender Singh, at the National Conference on Secondary Steel, spoke about the new areas the government is exploring where steel-use can be promoted, especially end use segment such as steel crash barriers, railway sleepers, bridges, houses, buildings, among others.
“The industry is in great anticipation since the big budget allocation in infrastructure development, as the announcement sets high consumption targets. This can prove to be a major demand driver for the growth of steel sector. Such a move from the government augurs for further investment in the sector, giving a major push to the industry as a whole.” Turakhia added.
However, he also said that it needs to be seen how the problem faced by steel sector will be addressed by the government and how well it is prepared to implement a way out for the same, given the inefficient logistics system, high interest rates, lack of assured raw material supply and huge debt on the steel sector. “Once these issues are addressed, we believe nothing can stop the industry from achieving its production target of 300 MT by 2030 from the current 110 MT.”
BW Reporters
Naina Sood is a Economics graduate and has done her post graduation in International economics and Trade. She has deep interests in Indian economy and reforms
