Steel Sector in India

by Mentors4ias · November 16, 2015

Steel is the backbone of any modern economy. The level of per capita consumption of steel is often considered an important index of the level of economic development.
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 sector has been a major contributor to India’s manufacturing output.
It is also an important employment generating sector- employs over 600,000 people.

Today the sector contributes nearly 2% of country’s GDP.
India occupies a central position on the global map and has overtaken the US to become the third-largest producer in the world
Globally industry is going through a crisis with a fall in production by 2.3 per cent this year. However, India has been able to show a four per cent increase in production despite heavy imports from China.
The Indian steel industry is very modern with state-of-the-art mills. It has always strived for continuous modernisation and up-gradation of older plants and higher energy efficiency levels.
Steel production in India has been steadily increasing, and has doubled in last ten years – from 43.44 million tonnes (MT) in 2004-05 to 88.12 MT in 2014-15.
India is predicted to triple its production capacity from roughly 110 MT presently to about 300 MT in the next 10 years.

In trade and commercial parlance, all steel producers and processors are classified under broad category ‘secondary steel sector’
The production landscape across the globe is largely dominated by blast furnace based integrated steel producers who make steel using the basic ore.
However, In India, the contribution of this route of steel making is low at around 45% only and majority steel (55%) is produced adopting the electric steel making process using steel scrap or from sponge iron produced in-house or purchased.
While some of these units are very large, of the order of several million tonnes, most of the units are small, of the order of a few thousand tonnes to a few lakh tonnes per annum and conventionally known as mini steel plants.
These are mostly Electric Induction Furnace (EIF) and/or Electric Arc Furnace (EAF). India enjoys a unique position in steel making where about 32% steel is produced in Electric Induction Furnaces.
India is also the largest producer of sponge iron producing about 24 million tonnes per annum.
Besides the steel producers, there are a large number of steel processing units viz. Steel Re-Rolling Mills, Cold Rolling Mills, Galvanizing Units and Colour Coating units which produce value added steel from purchased/ imported semi-finished / finished steel inputs.

Four new large steel plants would be established in Chhattisgarh, Jharkhand and Karnataka.
Steel Research and Technology Mission of India (SRTMI) research facility will be established soon with corpus fund of Rs.200 crore for research and development in the metal sector. This includes equal investment of Rs. 100 crore by the industry and the steel development fund.
SAIL plans to invest US$ 23.8 billion for increasing its production to 50 MTPA by 2025. SAIL is currently expanding its capacity from 13 MTPA to 23 MTPA, at an investment of US$ 9.6 billion.
A Project Monitoring Group (PMG) has been constituted under the Cabinet Secretariat to fast track various clearances/resolution of issues related to investments of Rs 1,000 crore (US$ 152 million) or more.
To increase domestic value addition and improve iron ore availability for domestic steel industry, duty on export of iron ore has been increased to 30 per cent

India is expected to become the world’s second largest producer of crude steel in the next 10 years, moving up from the third position, as its capacity is projected to increase to about 300 MT by 2025.
Huge scope for growth is offered by India’s comparatively low per capita steel consumption. As per the report of the Working Group on Steel for the 12 th Five Year Plan, there exist many factors which carry the potential of raising the per capita steel consumption in the country. These include among others, an estimated infrastructure investment of nearly a trillion dollars, a projected growth of manufacturing from current 8% to 11-12%, increase in urban population to 600 million by 2030 from the current level of 400 million, emergence of the rural market for steel currently consuming around 10 kg per annum buoyed by projects like Bharat Nirman, Pradhan Mantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana among others.