02 Jul, 2022 Category Steel,

The Saga of Indian Steel Industry

The steel industry in India is expected to reach 5 trillion dollars by 2025.

Many Indian companies have become internationally competitive because of their access to low-cost coal deposits and iron ore mines; however, several issues remain that hamper further development. Steel demand is expected to grow by 10% in India in 2022.

The steel sector contributes 2% of India’s GDP and employs two and a half million people.

India is the second-largest producer of crude steel, with a production capacity of 142 million tonnes per annum.

Steel exports

Steel is a primary material used in construction, infrastructure, and manufacturing. It is also a significant factor in the economy. Steel exports from India grew significantly in the last decade, which has been attributed to several factors.

First, the country's steel industry has been able to adapt to the changing needs of its customers. The Indian market is dominated by small-scale steel producers, who have been able to provide low-cost products that appeal to consumers in developing and industrialized countries.

This flexibility has allowed India to capitalize on shifting demand trends across regions and countries. Second, India's steel exports are highly competitive compared to other nations' steel production costs and prices. Few nations can compete with India's steel production costs: China (which dwarfs all other competitors), Brazil, and Russia being notable exceptions. The demand has grown considerably in both emerging markets and developed markets.

Steel imports

Steel imports in India have been on a constant rise for the last few years. The increase in steel imports is attributed to the growth of the construction sector, real estate, and infrastructure development.

Most of the increase in steel imports came from China which has also played a significant role in India's increasing steel import industry.

This rise in imports has led to a decline in domestic output, which has caused concern among India's government and business leaders. They are worried that this trend will continue and will lead to an increase in imports from other countries.

Steel supplier

  • The country's steel industry is also an essential supplier to its domestic market, accounting for roughly 50 percent of the country's steel demand by value.
  • In addition, India has also been producing high-quality products at competitive prices, which have helped increase its share in the global steel market over time.
  • The main reason why India has become such a famous steel supplier is due to its low labor costs and the availability of a large pool of skilled workers.
  • As a result, India has become a critical steel supplier and steel manufacturer for many countries around the globe.
  • Two main factors have led to this increase in demand: economic growth and government policies.
  • Economic growth means there are more people with money to spend, which is good news for businesses that sell goods like steel; government policies mean there are fewer restrictions on how much steel can be imported or exported from one country to another (this includes tariffs on imports).
  • This growth has been attributed to several factors, such as low production costs and technological advancements that have made it possible for steel manufacturers.
  • Quite unfortunately, it is expected India would lose 40% of steel exports due to the new duty laws.

Due to the same issue, the price of steel is also around 15% lower than it was. That is, each tonne that costed Rs. 77,000 in April costs Rs. 60,000.