Steel Industry
The steel industry has achieved greater heights after the liberalizations policy in India.
Introduction
Steel has been considered as a backbone of any human civilisation. It is a crucial part of any developed country. The per capita consumption of steel helps to measure the index of the level of socio-economic development of any country and the living standards of its citizens. All major industries are dependent on the strong quality of steel, a good quality of steel is a factor behind industrial economies and their income generation. 1991 Liberalization policy acted as a boon for the steel industry in India.
This industry has increased its output to another level, with the involvement of technology and innovations.
Historical perspective of Steel Industry
The finished steel production has jumped from 1.1 million tonnes in 1951 to 31.63 million tonnes in 2001 to 102.49 million tonnes in 2021. As of now, India is the world’s second-largest producer of crude steel with a total output of 9.8 million tonnes. Since 1991, various policies have been implemented by the respective governments in order to raise the steel industry in India. One of the important steps was made, when the iron & steel industry was removed from the list of industries that are reserved for the public sector and exempted from the compulsory licensing provisions under the Industries (Development & Regulation) Act, 1951.
The analysts have suggested that the steel industry is likely to increase the production of crude steel by 18%, which will take it to reach 120 million tonnes. The Steel industry has been recognised as a significant contributor to India’s manufacturing outputs.
Growth of Indian Steel Industry after Liberalization
The steel sector was the first industry in India, which was exempted from the licensing regime, pricing and distribution controls. This was done while considering the potential of the steel industry in India. At present, the steel industry contributes 1.5 % to India’s GDP, and along with the SMEs it is considered as the backbone of the Indian economy. India is the third-largest manufacturing hub of steel pipe all over the world.
Sector-wise demand for steel
Construction Sector: This sector contributes around 62% of India’s total steel demand. It is expected by the experts that India will flourish to be the world’s third-largest construction market by end of the year 2025. Moreover, the country has foreseen to increase 50% of the total construction investment of India by the year 2025.
Railways: This sector contributes 3% of the total steel demand in the country. This sector is looking forward to establishing the high-speed rail corridors, which will significantly boost the demand for steel.
Automobiles: Being the fourth largest automobile industry in the world, automobiles create 9% of the total demand for steel consumption in India.
Capital Goods: Having various sub-segments and units in itself, this sector contributes 15% of the total steel demand in India. This sector involves machinery, equipment, heavy and light machines, product making machines, construction mining, etc.
Recent Government Initiatives for the growth of Steel Industry
The Government is actively participating in the endeavor of the Steel Industry, many steps have been taken by the government to smoothen the production & sustaining of the steel industry. The National Steel Policy (NSP) 2017 was implemented for the faster development of the steel industry at the world level. Other important initiatives are taken by the government to flourish the Steel Industry in the competitive world.
In October 2021, the government made guidelines for approving a special steel production-linked incentives scheme (PLI).
MoU was signed between India and Russia in October 2021 to produce coking coal, which is used in steel making.
Mr Dharmendra Pradhan, Minister of Steel & Petroleum & Natural gas has addressed the public at large, whereby Mission Purvodaya was launched looking forward to accelerating the development of eastern states of the country by establishing an integrated steel hub in Kolkata.
The government of India has allocated Rs. 39.25 Crore to the Ministry of Steel in its Union budget 2020-21.
Challenges before the Steel Industry
Despite the splendid growth of the steel industry in India, it still faces major challenges in the growth aspects. Some of the challenges are as follows:
Finance: Roughly, to set up 1 tonne of steelmaking capacity unit, it requires 7,000/- Crore. The Indian industrial sector faces serious financial blows and the high cost of money lending.
Logistic: The Steel industry requires defined managing logistics that require heavy costs and great challenges. Most of the steel plants are established inland, which creates more challenges in managing logistics.
Tax, Duties and cess: The heavy taxes and duties hinder the growth of the steel Industrial in world competitiveness. However, the government has lowered the corporate tax rates to 25%.
Conclusion
The Indian Steel Industry has achieved heights in world competitiveness. The government of India has also provided all the required channels to the steel industry to compete at the world forum. Having great potential, the Indian steel sector will act as a boon for the national economy.