Steel: Crucial in India’s ascent to $5 Trillion economy
The Government's vision to achieve a $5 trillion economy by 2024 entails investments worth INR 100 lakh crore in infrastructure sectors, including several steel intensive sectors like Housing for All, 100% electrification, piped water for all etc. Steel has several inherent advantages of durability, faster completion time, reduced environmental impact, and creation of a circular economy. Steel will have a crucial role to play in India’s rise to a $5 trillion economy.
Keeping in mind the importance and relevance of steel in building a $5 trillion economy, the Ministry of Steel has defined its Vision in order to shape and drive the Indian steel sector. To ensure the Vision incorporates India’s growth imperatives and addresses the aspirations of all stakeholders of the Indian steel ecosystem, the Ministry thoroughly studied relevant policy documents and held many stakeholder consultations such as:
Derived from the detailed studies and consultations to further develop the Indian steel sector and to ensure a robust and globally competitive domestic steel industry as a critical pillar in India’s ascent to a $5 trillion economy in a rapid environmentally sustainable manner, the Ministry of Steel has laid out a comprehensive vision:
“Meet the anticipated demand of 160 million tons of steel for becoming a $5 trillion economy, through a competitive, efficient, environment friendly steel industry, adhering to global safety and quality standards.”
Roadmap towards achievement of the 5-year vision
The 5-year vision for the Ministry of Steel defines key imperatives for the sector across 5 broad areas. In order to achieve the stated elements of the Vision, the Ministry translated each of these 5 elements into 11 key initiatives to action:
In order to ensure focus and drive tangible outcomes, The Ministry has prioritized 5 out of these initiatives due to their potential impact on ease of doing business/living, employment generation as well as their criticality to economic growth.
High Impact 100-day initiatives
From across these initiatives, 4 key elements had been prioritized by the Ministry of Steel under the 100 days agenda of the Government. A brief summary of progress on these initiatives is as follows:
In addition to these 4 initiatives, the Ministry of Steel has also worked on 6 other key initiatives. These initiatives include:
Five proposals for amendments in the relevant mining rules have been sent to the Ministry of Mines. Some of the major proposals include:
Interactions held with INSDAG, SAIL-CET, MECON, HSCL, ISA, architects, builders, and contractors for increased steel usage in commercial and residential construction.
A brief on Indian Steel Sector is given below:
BRIEF ON INDIAN STEEL SECTOR
The steel industry has been a core pillar of industrial development in India. From a capacity of ~1MT at the time of independence, India’s crude steel capacity has risen to ~142 MT at present and India has become the world’s second largest producer of steel (~111 MT crude steel production in 2018). A vibrant domestic steel industry is important for a developing economy as it is a critical input across major sectors such as construction, infrastructure, automotive, capital goods, defence, rail etc. Steel has also been proven to be a driver for prompt environmentally sustainable economic development due to its recyclable nature and faster associated completion times. The steel sector is also pivotal for a nation due to driving employment generation and economic growth. It has a multiplicative effect on the economy stemming from both direct and associated effects on the supply chain and consumption industries.
The Ministry of Steel, Govt. of India is responsible for planning and development of iron and steel industry, development of essential inputs such as iron ore, limestone, dolomite, manganese ore, chromites, ferro-alloys, sponge iron etc. and other related functions.
The steel industry in India is well established and has shown a steady growth. The demand for finished steel has consistently grown at 6.4% over the past 5 years reaching ~99 MTPA in 2018-19. In accordance with the rising demand, the crude steel capacity in the country has also increased to 142 MTPA.
1.1 India’s crude steel capacity and production:-
Domestic crude steel capacity and production has shown a sustained rise since 2014-15. Crude steel production grew at a compound annual growth rate (CAGR) of 5.6% during the last five years ending 2018-19 along with robust capacity expansion from ~110 Million Tonnes (MT) in 2014-15 to ~142 MT in 2018-19, showcasing a strong 6.6% CAGR.
India’s crude steel capacity and production (2014-19) (Source: JPC)
Capacity and Production of Crude Steel |
|||
(in million tonnes) |
|||
Year |
Working Capacity |
Production |
% Utilisation |
2015-16 |
121.971 |
89.791 |
74% |
2016-17 |
128.277 |
97.936 |
76% |
2017-18 |
137.975 |
103.131 |
75% |
2018-19 |
142.236 |
110.921 |
78% |
Source: JPC |
|
1.2 India’s position in global crude steel production
This consistent growth in production has ensured that India remains a dominant player in the global steel industry. India was the 2nd largest crude steel producer (75.69 MT) with a 6.1% share in total world production and a 4.4% growth in production over same period of 2018.
Country |
2016 |
2017 |
2018 |
Jan-Oct 2019 |
China |
807.610 |
870.855 |
923.836 |
828.330 |
India |
95.480 |
101.455 |
109.272 |
93.304 |
Japan |
104.780 |
104.662 |
104.319 |
83.791 |
United States |
78.480 |
81.612 |
86.607 |
73.539 |
South Korea |
68.580 |
71.030 |
72.464 |
60.121 |
Russia |
70.450 |
71.491 |
71.246 |
59.341 |
Germany |
42.080 |
43.297 |
42.435 |
34.017 |
Turkey |
33.160 |
37.524 |
37.312 |
27.973 |
Brazil |
31.280 |
34.365 |
35.407 |
27.216 |
Italy |
23.370 |
24.068 |
24.532 |
19.845 |
Others |
271.680 |
289.441 |
281.607 |
233.406 |
Total |
1626.950 |
1729.800 |
1789.035 |
1540.882 |
Source : WSA, Statistical Year Book 2019
Countries |
2016 |
2017 |
2018 |
2019 (f) |
2020 (f) |
China |
681.000 |
773.800 |
835.0 |
900.1 |
909.1 |
United States |
91.900 |
97.700 |
100.2 |
100.8 |
101.2 |
India |
83.643 |
88.680 |
96.7 |
101.6 |
108.7 |
Japan |
62.200 |
64.400 |
65.4 |
64.5 |
64.1 |
South Korea |
57.100 |
56.300 |
53.6 |
53.9 |
54.2 |
Russia |
38.700 |
40.900 |
41.2 |
43.2 |
43.9 |
Germany |
40.500 |
41.000 |
40.8 |
37.2 |
37.8 |
Turkey |
34.100 |
35.900 |
30.6 |
26.1 |
27.7 |
Italy |
23.700 |
25.100 |
26.4 |
26.9 |
27.5 |
Mexico |
25.500 |
26.500 |
25.4 |
24.7 |
25.1 |
Other |
381.157 |
382.220 |
396.8 |
396.0 |
406.4 |
Total |
1519.500 |
1632.500 |
1712.1 |
1775.0 |
1805.7 |
Source : WSA, Statistical Year Book 2019, short range outlook Oct. 2019
1.3 Share of different routes of production in India
This growth in capacity has been enabled by a vibrant growth across all three routes of production (BOF, EAF and IF) ensuring the Indian steel industry remains extremely diverse. One of the key factors for India’s strong growth rate in crude steel capacity has been the exceptional growth rate in the electrical route of steel making (EAF and IF), which accounted for 56% of the crude steel production in 2018-19.
Crude steel production by process route (2014-19) (Source: JPC)
1.4 Consumption of Steel
Description |
2015-16 |
2016-17 |
2017-18 |
2018-19 |
Crude steel Production |
89.790 |
97.936 |
103.13 |
110.921 |
Finished steel Production |
102.904 |
115.91 |
126.855 |
101.287* |
Imports |
11.712 |
7.227 |
7.483 |
7.835 |
Export |
4.079 |
8.243 |
9.620 |
6.361 |
Apparent Steel Use (ASU) |
81.525 |
84.042 |
90.707 |
98.708 |
% Growth |
5.9% |
3.1% |
11.3% |
17.5% |
Population (MOSPI) in Crores |
128.3 |
129.9 |
131.6 |
133.2 |
ASU per capita (kg) |
63.54 |
64.70 |
68.93 |
74.11 |
% Growth |
4.6% |
1.8% |
8.5% |
14.5% |
Source JPC, *Crude Steel equivalent
Total Finished Steel |
2015 |
2016 |
2017 |
2018 |
ASU (in million tonnes) |
80.075 |
83.643 |
88.68 |
96.738 |
Population (MOSPI) (in Crores) |
126 |
127 |
129 |
132 |
ASU per capita (kg) |
64 |
66 |
69 |
73 |
% Growth |
4.9% |
3.1% |
4.5% |
6.2% |
1.5 India’s robust steel input industries
India’s strong growth in crude steel and finished steel production has been supported and enabled by vibrant sponge iron (especially for electrical routes of steel making) and pig iron industries which serve as crucial inputs for the steel industry.
India has been the world’s leading producer of sponge iron since 2003, with a host of coal-based units located in the mineral rich states of the country. Over the years, the coal-based route has emerged as a key contributor and accounted for 80% of total sponge iron production in the country in 2018-19. Capacity in sponge iron making has also increased over the years and stood at 46.56 MT in 2018-19.
India’s sponge iron production (2014-19) (Source: JPC)
India is also an important producer of pig iron. Post liberalization, with setting up several units in the private sector, not only have imports drastically reduced, but India has also turned into a net exporter of pig iron. The private sector has accounted for 91% of total production of pig iron in the country in 2018-19.
Pig Iron Domestic Availability Scenario (in million tonnes) |
||||||
Item |
2014-15 |
2015-16 |
2016-17 |
2017-18 |
2018-19 |
Apr-Aug, 2019* |
Production |
10.23 |
10.24 |
10.34 |
5.73 |
6.41 |
2.56 |
Export |
0.54 |
0.29 |
0.39 |
0.52 |
0.32 |
0.15 |
Import |
0.02 |
0.02 |
0.03 |
0.02 |
0.07 |
0.01 |
Consumption |
9.06 |
9.02 |
9.04 |
5.19 |
5.09 |
2.46 |
Source: JPC; *Provisional |
1.6 India’s finished steel production and net export/import scenario
India’s rising demand and strong growth in crude steel capacity has led to India’s finished steel production (alloy/stainless + non-alloy) witnessing a 6% CAGR over the past 5 years. Apart from catering to a robust domestic demand, the Indian steel industry is a global exporter as well and has reduced its import requirements from 9.32 MT to 7.83 MT over the past 5 years. India was a net exporter in 2016-17 and 2017-18, however returned to being a net importer in 2018-19. India has been a net exporter of finished steel in FY20.
Trade of Finished Steel |
|||||||
(in million tonnes) |
|||||||
Trade |
2013-14 |
2014-15 |
2015-16 |
2016-17 |
2017-18 |
2018-19 |
Apr-Nov 2019-20 |
Imports |
5.45 |
9.32 |
11.712 |
7.227 |
7.483 |
7.834 |
5.077 |
Export |
5.985 |
5.596 |
4.079 |
8.243 |
9.62 |
6.361 |
5.753 |
Balance of trade |
0.535 |
-3.724 |
-7.633 |
1.016 |
2.137 |
-1.473 |
0.676 |
Import Intensity |
7.4% |
12.1% |
14.4% |
8.6% |
8.2% |
7.9% |
8.6% |
Export Intensity |
8.1% |
7.3% |
5.0% |
9.8% |
10.6% |
6.4% |
9.7% |
Source: JPC |
Going forward, the Government's vision to achieve a $5 trillion economy by 2024 entails investments in several steel intensive sectors like Housing for all, 100% electrification, piped water for all etc. The growth potential for the sector is thus immense and the domestic steel consumption will increase significantly in line with this vision. It is therefore important to ensure that this demand is served through a robust domestic steel industry. The National Steel Policy 2017 laid out a set of key imperatives to create a globally competitive steel sector.
The National Steel Policy (NSP) was approved by the Ministry of Steel and notified on 8th May, 2017 to ensure that the Indian steel sector is prepared to service the growing requirements of modern India and to promote a healthy sustainable growth for the sector. The NSP was defined with the vision “to create a technologically advanced and globally competitive steel industry that promotes economic growth”. The policy outlined key objectives for the steel sector and laid down multiple initiatives for the industry.
Key features of the NSP 2017 include establishing self-sufficiency in steel production by providing policy support & guidance to private manufacturers, MSME steel producers and CPSEs. It encourages capacity additions, development of globally competitive steel manufacturing capabilities as well as cost-efficient production by facilitating domestic availability of iron ore, coking coal & natural gas, as well as overseas asset acquisitions of raw materials. To support the sector, it also promotes initiatives to enhance the domestic steel demand.
The policy projects crude steel capacity of 300 million tonnes (MT), production of 255 MT and a robust finished steel per capita consumption of 160 Kg by 2030-31, as against the current consumption of 74 Kg. The policy also envisages 100% indigenous fulfilment of demand for high grade automotive steel, electrical steel, special steels and alloys for strategic applications along with an increase in domestic availability of washed coking coal so as to reduce import dependence on coking coal from about 85% to around 65% by 2030-31.
To action the initiatives mentioned as part of the National Steel Policy, a strategic roadmap is being created by the Ministry of Steel.
Development of a strategic roadmap
The National Steel Policy 2017 outlines a variety of challenges faced by the industry and potential solutions which the Ministry of Steel should action. It defined 106 initiatives for the steel sector across 15 different areas:
S No |
Focus area |
# Actions |
1 |
Steel Demand |
5 |
2 |
Steel Capacity |
6 |
3 |
Raw Materials |
35 |
4 |
Land, Water and Power |
10 |
5 |
Infrastructure & Logistics |
6 |
6 |
Product Quality |
4 |
7 |
Technological Efficiency |
5 |
8 |
MSME Sector |
3 |
9 |
Value Addition in Alloy, Special and Stainless Steels |
5 |
10 |
Environment Management |
7 |
11 |
Safety |
3 |
12 |
Trade |
4 |
13 |
Financial Risks |
2 |
14 |
Role of CPSEs & Way Forward |
5 |
15 |
Focus on High-End Research: SRTMI |
6 |
The Indian steel industry will be a key participant in several of these initiatives. The Indian steel sector is a diverse and vibrant ecosystem comprising of a multitude of stakeholders across the value chain. Each stakeholder brings valuable inputs to the sector based on their rich experience. In order to leverage these experiences and ensure efficient operationalization of the envisioned initiatives, the Ministry alongside the CPSEs regularly facilitates interaction with the various stakeholders.
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