Indian steel – A growth story
Sushim Banerjee, INSDAG
26 September 2016
Indian steel market is poised to grow at a rate much exceeding the global growth. The World Steel Association has assessed that current steel consumption in India at 81.5 MT is likely to grow at 5.4 per cent in 2016 and would maintain the growth at 5.7 per cent in next year. This is against 0.2 per cent growth in the global steelmarket in the current year. The subdued growth in steel demand in the country at only 1.3 per cent over the previous year observed in the first five months of the current year is explained by declining trend of Gross Capital Formation as a percentage of GDP in the first quarter (29.8 per cent), the negative growth in Industrial Production and Manufacturing at per cent and per cent respectively in the first four months of the current fiscal and a massive low production in steel-intensive capital goods output (negative per cent). These two trends need to be reversed on an urgent basis. Already the Government is taking a few enabling policy measures to relax constraining rules and procedures to improve the business scenario so that doing business in India is improved significantly and India proves itself the most attractive destination in the world. PPP guidelines are being made more investor friendly with the government taking up the major share of the business risk, Uniform Goods and Service Tax is being implemented from April’17 after getting the concurrence of all the states.
A few mega projects like Dedicated Freight Corridors funded by World Bank and Asian Development Bank, Industrial Corridors between Amritsar and Kolkata, Chennai to Bangalore, Delhi to Mumbai are being implemented which would ultimately establish a link between North East Region with other regions of the country. Metro Rails are expanded to other cities like Ahmadabad. Railways have decided to enhance more procurement of wagons and coaches, lay down new lines and convert a large numbers of metre gauge lines to Broad gauge. The 7500km long coastline and 14500km navigable waterways are being planned to be developed as alternative to Rail and road network. A number of minor ports numbering around 200 and a number of minor airports numbering around 35 are being developed to improve the civil aviation and sea movements. All these measures would enhance the steel demand in the country and reduce logistic costs to make Indian steel cost competitive in the world market.
Thanks to a series of timely and effective trade measures adopted by the Government like Minimum Import Prices, Safeguard Duties, Anti Dumping Duties, the abundant flow of cheap steel imports from China, Japan, South Korea and Russia has been restrained. It is likely that India becomes a net exporter of steel in the current year. The rising domestic demand and increasing exports of steel by India would fully match the incremental steel availability from Indian steel plants in the coming year.