Steel Industry is the backbone of the Indian Economy. While the government of India has always taken concrete measures to make the industry competitive, the industry is often found amidst a plethora of challenges.
Let us learn more about the industry, its trends and what is disturbing its competitiveness in the economy.
It is expected that by the year 2030, the finished steel consumption in India will reach 230 MT, which is the current world average. Steel consumption in the real estate sector is bound to escalate as a significant portion of steel production is consumed by the construction and housing sector.
For the same cause, the government is developing industrial corridors and is also rolling out social sector schemes, such as the Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT).
Even though the initial two sections present a rosy picture of the Indian steel sector, the sector has been struggling amidst various challenges.
Challenges faced by the Industry
The sector faces stiff competition from the Chinese. China is a nation with excess capacity in its steel sector, which it tends to tackle by pushing its exports. This deeply impacts countries like India, which are heavily dependent on steel consumption.
The ongoing crisis in the automobile sector has hardly hit the industries. Demand for real estate is also falling amidst liquidity crunch and a slowing economy. Many major steel producers have resorted to cutting down production. In August, JSW steel, the second-largest private steelmaker, cut crude steel output by more than 13% from a year ago.
From being a net exporter in FY2018, it once again reduced to being a net importer in FY2019. Approximately 2-3 million tonnes of steel are being imported every year.
The US-China Trade war has also created hassles for the sector.
The minister of Petroleum, Natural Gas and Steel, Dharmendra Pradhan quoted, "India has been importing oil and gas from several countries, but in all the exporting nations, there is a very little or no presence of Indian steel in the massive infrastructure put up for trade."
Well, amidst all those challenges, has the government taken any legit steps to resolve the situation?
Steps taken up by the government
The National Steel policy announced in the year 2017, aimed at boosting the growth rate of steel to 7.5% to meet the expected demand for 230 MT in 2030-2031 through higher spending on infrastructure and construction activities.
The Ministry of Steel recently organized a daylong "Chintan Shivir" where deliberations were held among key stakeholders to stimulate the growth of the Indian steel industry by arriving at a concrete strategy to make the sector vibrant, efficient, environment-friendly, and globally competitive.
What are the current needs of the industry?
Free Trade Agreements have considerably increased the number of imports to as higher as 77%. To prevent this, the Indian steel industry recently demanded a 25% safeguard duty to be placed on all imports.
This step, if undertaken, would work in a positive light. At the same time, the industry should be encouraged to use the Free Trade Agreements signed with various nations as a source of advantage by the production of cost-effective, quality steel in accord with global standards.