Can we think of development of any nation without usage of steel? Probably the answer is NO. Then where does Indian Steel Industry stands?

Steel is a key ingredient for economic growth. It is an essential input for most manufacturing activities and for building the infrastructure necessary for economic development. Over the past decade, the steel industry has experienced an unprecedented expansion in production capacity, as many developing economies entered a metal-intensive stage of growth. 

The steel sector in India is almost a century old, and exhibits significant economic importance due to rising demand by sectors such as infrastructure, real estate, and automobiles, in domestic as well as international markets. The level of per capita consumption of steel is an important determinant of the socio-economic development of the country.

The Indian steel industry is divided into primary and secondary sectors. The primary sector comprises a few large integrated steel providers producing billets, slabs and hot rolled coils. The secondary sector involves small units focused on the production of value-added products such as cold rolled coils, galvanised coils, angles, columns, beams and other re-rollers, and sponge iron units. Both sectors cater to different market segments.

The Indian steel industry has entered a new development stage since 2007–08 and is riding on the resurgent economy and the growing demand for steel. India’s 33 per cent growth in steel production in the last five years was second only to China among the top five steel producing nations, according to data by World Steel Association (WSA).

India is the fourth largest producer of crude steel and the largest producer of soft iron in the world. Presently, the Indian steel industry employs around 500,000 people while the per capita consumption in 2013 stood at around 57.8 kilograms. However, these figures are expected to rise with increased industrialisation throughout the country.

Let’s have a quick look on Indian Steel production figures:


Imports
Exports

The above statistics gives a clear indication that although there have been a significant growth in steel production in the country in last five years but the concern is the low per capita Steel consumption which is around 58 Kg as against world’s average of 210 kg.

The centre is aiming augmenting the steel sector and removing the hurdles in steel production by scaling up production to 300 MT by 2025 from the 81 MT in 2013-14, the demand for steel in India is expected to rise by 4-5 per cent this year and will touch a compounded annual growth rate (CAGR) of 15 per cent after FY17. Especially Government's high focus new projects, developing infrastructures, including the freight and industrial corridors, development of smart cities, metro rail projects etc are expected to increase the domestic steel demand. The new MMDR amendment ordinance is also a move by Government to encourage the Steel & Mineral sector in India.

The vision of strengthening the Steel sector in India needs
 

		tremendous support from the mineral sector
		Support from R&D sector
		Increase in the domestic steel consumption
		Steel manufacturers needs to maintain low production and operational costs in order to compete in the international market and minimise import of Steel
		Sourcing of raw materials for steel making other than availability of water & Power
		Funds
		Timely execution of the projects, etc

  
Irrespective of low per capita consumption of Steel in India, there is still a good demand of Steel in Indian market. Most of the projects in India are awarded in EPCM / turnkey basis. And it is observed that the executing agencies / contractors are procuring equipments and fabricated structural steel from China. Reason being this is more economical than getting it fabricated in India. This is really a matter of concern and following things needs to be looked into to address the issue;

		Low productivity: The per capita labour productivity in India is at 90-100 tonnes which is one of the lowest in the world. The labour productivity in Japan, Korea and some other major steel producing countries is about 600-700 tonnes per man per year.
		Low potential utilisation: The potential utilisation in iron and steel is very low. Rarely the potential utilisation exceeds 80 per cent.. This is caused by several factors, like strikes, lockouts, scarcity of raw materials, energy crisis, inefficient administration, etc.
		Inferior Quality of Products: Lack of modern technological and capital inputs and weak infrastructural facilities leads to a process of steel making which is more time consuming, expensive and yields inferior variety of goods. Such a situation forces us to import better quality steel from abroad. Thus there is urgent need to improve the situation and take the country out of desperate position.

The other major challenge that our Steel industry is facing is sourcing of coking Coal. The in-situ reserves of Coking coal in India is 33.47 Billion Tonnes as on 01.04.2011 upto 1200 m depth.

As per National Steel Policy – 2012 (NSP), the requirement of critical raw material for steel making (in million ton) are;

India has been able to produce Iron ore up to 150 million ton in the last Fiscal (2013-14) and this is expected to increase further. But we are lacking in good quality coal reserves required for Steel making. In india coal for steel making is generally imported. The prices of coking coal in international market directly affect the cost of production of Steel in India.

However considering the slow growth of mineral sector in India and the challenges faced by miners due to Environmental issues, even requirement of Iron ore may become a major bottleneck in the growth of Steel Sector in India.

To achieve the target of 300 million ton of steel production in India by 2025, the above issues need to be looked into seriously. Also we need to strengthen our R&D sector for Steel Industry by contributing more towards beneficiation projects, alternate steel making technologies, more & more utilisation of fines, recycling of steel, low consumption of power, etc. At the same time thrust is also required to be given towards fast decision making, avoiding procedural delays and timely execution of the projects.

Reference:

	1.	World Steel Association (WSA)
	2.	India Brand Equity Foundation (IBEF)
	3.	Joint Plant Committee (JPC)
	4.	National Steel Policy (NSP)
	5.	Ministry of Steel (MoS)