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The steel industry has proven to be an important and crucial element in India’s blueprint to achieve a USD 5 trillion economy. It also has given way to investments worth Rs 100 trillion in the infrastructure sector, including several steel intensive sectors like Housing for All, 100 per cent electrification and piped water for all, among other segments. As stated in a PIB release, the Ministry of Steel has listed down its vision for the next five years, various initiatives undertaken and an analysis of the industry as a whole.
5-year Vision of the Ministry of Steel
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:
1. Increase steel usage intensity to boost Demand Generation – Make in Steel
2. Improve Trade Balance for the steel sector
3. Enable supply through best-in-class Greenfield capacity addition
4. Set-up value addition focused Steel Clusters
5. Increase raw material production (by leveraging Digitisation in Mining)
6. Promote domestic manufacturing and procurement of Capital Goods for steel
7. Promote a shift to an environmentally friendly steel sector
8. Promote R&D for the Indian steel sector
9. Promote safety and workforce welfare for the Indian steel sector
10. Facilitate development of skilled manpower
11. Ensure sufficient infrastructure and logistics capacity for the steel sector
In order to ensure focus and drive tangible outcomes, The Ministry has prioritised 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.
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.
1. Steel industry at a glance
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 per cent 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 per cent 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 per cent CAGR.
India’s crude steel capacity and production (2014-19) (Source: JPC)
Crude steel capacity in country stood at 142.236 million tonnes in 2018-19 while production of crude steel reached at 110.921 million tonnes.
1.2 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 per cent of the crude steel production in 2018-19.
1.3 Consumption of Steel
The per capita consumption of finished steel in India has been rise from 60.8 kg in 2014-15 to 74.1 kg in 2018-19
1.4 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 per cent 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.
2. National Steel Policy 2017
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 per cent 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 per cent to around 65 per cent 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.
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