India is richly endowed with significant quantities of iron ore. It’s quite natural therefore, the steel industry in the country is amongst the first and the most established sectors contributing strongly to India’s economy. The period between 2004 and 2008 was particularly fruitful for the Indian steel industry, but the global meltdown of 2008 did bring about a definitive downturn. However, since 2010, the industry has experienced a revival of sorts after going through a stagnant phase. While China, Japan and the United States were ahead of India in producing crude steel till a couple of years ago, India is poised to occupy the second spot in the world in the very near future. Worldwide figures indicate that the Indian steel industry’s market value could reach the astounding figure of USD 95 billion by 2016, just two years from now!
Reflecting the overall economic scenario over the long term, steel is a core sector that provides employment to over 550000 people and practically makes up 2% of the overall GDP of the country. Industry experts in the World Steel Association estimate that despite political uncertainty and economic deceleration in China, the demand for steel in India alone is expected to rise by over three times in 2014. This is also fuelled by derivatives of the need for steel in other related sectors like infrastructure, consumer durables and automobiles.
The fairly recent liberal reforms in industrial policy have given a definite boost to new entrants in the steel private sector. While existing facilities are being given a facelift in capabilities and machinery modernization, many new steel plants are also mushrooming across India’s length and breadth and harnessing the power of cutting-edge technology to maximize production volumes. Apart from the abundance of raw material and iron ore, the availability of cheap labor is a major factor in providing a remarkable cost advantage to the domestic steel industry. The consumption of crude and finished steel is expected to amount to more than 76 million tons this year. Exports too, are growing at an impressive pace. The iron ore pellet exports have shown a rise of nearly eleven times their figure just last year. Recognizing the huge potential of the sector, the Government of India too has taken some sound long-term initiatives like allowing a hundred percent FDI (foreign direct investment) through the automatic route in the Indian steel sector. The Ministry of Steel is also in talks with other nations such as Tanzania to give stronger support to cooperative initiatives in steel and mining activities.
As more and more people continue to migrate to urban areas throughout the world, the need for steel is bound to escalate. Be it to provide for infrastructure, construction, buildings, public transport, or to cater to the increasing consumer demand for automobiles and everyday consumer goods, it is being felt everywhere. Emerging economies, by virtue of the fast pace of industrialization and urbanization; will also continue to feature as major drivers for steel demand.