India is the fifth largest producer of steel
in the world. India Steel Industry has grown by leaps and bounds, especially in
recent times with Indian firms buying steel companies overseas. The scope for
steel industry is huge and industry estimates indicate that the industry will
continue will to grow reasonably in the coming years with huge demands for
stainless steel in the construction of new airports and metro rail projects.
The government is planning a massive enhancement of the steel production
capacity of India with the modernization of the existing steel plants.
Industry
Statistics
Government targets to increase the production capacity from 56 million tones annually to 124 MT in the first phase which will come to an end by 2011 - 12. Currently with a production of 56 million tones India accounts for over 7% of the total steel produced globally, while it accounts to about 5% of global steel consumption. The steel sector in India grew by 5.3% in May 2009. Globally India is the only country to post a positive overall growth in the production of crude steel at 1.01% for the period of January - March in 2009.
Export
About 50% of the steel produced in India is
exported. India's export of steel during April - December 2008 was 64.4 MT as
against 9.7 MT in December 2007. In February 2009, steel export increased by
17% to 12.6 MT from 10.8 MT in the same month last year. More than 50% of steel
from India is exported to China. The Government's decision to reduce export
duty on iron ore lumps from 15% to 5% has given a major boost to the export of
steel.
Hurdles
Power shortage hampers the production of steel
Use of outdated process for production
Lags behind in the production of stainless steel
Deficiency of raw materials required by the industry
Labor productivity is low. It is 144 tons per worker per year against 600 tons in Western Europe as per estimates
Inadequate shipment capacity and transport structure
Strengths
Hurdles
Power shortage hampers the production of steel
Use of outdated process for production
Lags behind in the production of stainless steel
Deficiency of raw materials required by the industry
Labor productivity is low. It is 144 tons per worker per year against 600 tons in Western Europe as per estimates
Inadequate shipment capacity and transport structure
Strengths
There are many strong points of the industry
that makes it one of the leading names in the global steel industry. The rate
of labor wage in India is among one of the lowest in the world thereby making
large scale production feasible. The boom witnessed in the automobile industry
has ensured that the demand for steel is increasing gradually and will continue
to do so in the near future. There is huge manpower in India which is another
reason why steel production in India is high and the industry is doing pretty
well both nationally and internationally.
Investments
Numerous steel companies some major projects
in the pipeline to invest in India Steel industry. Steel companies have
earmarked more than 100 million USD for the setting up of sponge iron units in
Koppal and Bellary in Karnataka. As per Investment Commission of India more
than 30 billion USD are in the pipeline for investment over the next five
years.