India is the world’s third-largest producer of crude steel (up from eighth in 2003) and is expected to become the second-largest producer. The steel sector in India contributes nearly two per cent of the country’s gross domestic product (GDP) and employs over 6,00,000 people. 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. Presently, India’s crude steel capacity is around 126 Million Tonnes (MT) and Production of crude steel was 97.4 MT during 2016-17.
2. Investing in Indian Steel sector- Make in India initiatives:
The following are some of the major factors which will boost the demand of steel in India and reasons to invest in Indian steel sector:
- The Union Cabinet has given its approval for National Steel Policy (NSP) 2017on 03.05.17. 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. The policy projects crude steel capacity of 300 million tonnes (MT), production of 255 MT and seeks to increase per capita steel consumption to the level of 160 Kgs by 2030 from existing level of around 60 Kg and major segments of consumptions are infrastructure, automobiles and housing sectors. 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.
- The Union Cabinet has also approved the policy for providing preference to domestically manufactured iron & steel products on Government procurement. The policy provides preference to Domestically Manufactured Iron & Steel Products (DM1&SP), in Government Procurement for specified steel products having minimum value addition of 15%.
- Major projects of the Government of India like development of 100 Smart cities, Smart armed force stations, Delhi Mumbai Industrial Corridor, development of ports, expansion of Railways, National Solar Mission etc. are expected to increase demand of steel significantly in coming years.
3. Investments in Steel Sector:
Some of the major investments in the Indian steel industry are as follows:
- Public sector mining giant National Mineral Development Corporation (NMDC) is setting up up a greenfield 3-million tonne per annum steel mill in Karnataka at an estimated investment of Rs 15,525 crore (US$ 2.8 billion). Further investments have also been planned by NMDC in coming years in view of requirement of Iron Ore for production of 300 MT steel by 2030.
- SAIL is currently expanding its hot metal capacity from 13 MTPA to 23 MTPA, at an investment of around Rs. 72,000 crore.
- Government has planned Special Purpose Vehicles (SPVs) with four iron ore rich states i.e., Karnataka, Jharkhand, Orissa, and Chhattisgarh to set up steel plants having capacity between 3 to 6 MTPA.
- Posco Korea, the multinational Korean steel company, has signed an agreement with Shree Uttam Steel and Power (part of Uttam Galva Group) to set up a steel plant at Satarda in Maharashtra.
- ArcelorMittal, world’s leading steel maker, has agreed a joint venture with Steel Authority of India Ltd (SAIL) to set up an automotive steel manufacturing facility in India.
- JSW Steel has announced to add capacity to make its plant in Karnataka the largest at 20 MT by 2022.