The Indian Iron and Steel Industry is 100 years old with Tata Steel (formerly Tata Iron and steel Co) setting up its first integrated steel plant in 1907 in Jamshedpur (India, Jharkhand State). This was also the first core sector to be freed from the licensing regime.

The demand by the sectors like infrastructure, automobiles, real estate has put India’s Iron and steel industry on the global map.

The demand for the steel in India is expected to rise by 7% in the next FY as compared to 5.5 % of projected growth in 2012-2013.

After China, Japan and the USA, India is the 4th largest producer of crude steel in the world.

Major Public sector and private sector companies like Tata Steel, SAIL, ESSAR Steel, JSW Steel, JSPL and expanding their capacity.  Currently Indian steel companies are producing 70 million tonnes of steel and by 2020 is expected to reach staggering 200 million tonnes surpassing Japan and USA.

The consumption of Steel largely depends upon the performance Infrastructure and automobile sectors.  The recent announcement by the Government to put 1$ trillion investment in infrastructure would give a boost in demand for the steel Industry especially in long products.

The per capita consumption of steel in India is meagre 39 Kg compared to global average of 150 Kg. Hence India is long way to catch the global average and surely this can be indicative to demand rise of steel and scope of capacity expansion for Indian steel companies in years to come.

 

The Major challenges that the industry is currently facing are:-

  1. Availability of low grade ores in India that leads to export high grade impacting production cost
  2. High power cost and non-availability of metallurgical coke
  3. Hurdle in land acquisition and regulatory clearances- like Mining bans in Karnataka and Goa
  4. Sluggishness to adapting sales and distribution practices towards customer- centric approach
  5. Attracting and retaining key talents

Future Outlook:

India has the enormous scope for steel consumption and for Indian steel manufacturer to expand their business.  The untapped market in rural infrastructure development and upsurge of sectors like packaging and engineering services are definitely going to create demand for steel and its products.

Because of vast Iron ore reserves and other dependent raw material availability at lower cost, Indian steel manufacturer can produce steel to catch the demand locally.  The large pool of technical human resource and advanced steel manufacturing technology may help producing superior quality of steel towards meeting the demand of various sectors.

 

References:

http://www.business-standard.com/article/markets/uninspiring-outlook-for-indian-metals-minerals-in-2014-113122301015_1.html

http://www.accenture.com/in-en/landing-pages/Documents/industry-steel/POV-Steel-Development-online.pdf

http://www.icra.in/Files/ticker/SH-2014-Q1-1-ICRA-Ferrous%20Metals.pdf

http://steel.nic.in/Long%20Term%20Perspectives.pdf

http://www.ibef.org/industry/steel.aspx

http://www.cci.in/pdfs/surveys-reports/Iron-and-Steel-Industry-in-India.pdf

http://articles.economictimes.indiatimes.com/2014-08-11/news/52687424_1_national-steel-policy-vishnu-deo-sai-steel-production

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