Steel Sector in India After Covid19
Steel Sector in India
India was the world’s second-largest steel producer in 2019. India surpassed Japan to become the world’s second-largest steel producer in 2019, with crude steel production of 111.2 million tonnes (MT). In India, as per Indian Steel Association (ISA), steel demand is estimated to grow 7% in FY20 and FY21.
In FY20, crude steel production and finished steel production in India was 108.5 MT and 101.03 MT, respectively.
Between April 2020 and January 2021, India’s cumulative production of finished steel at 76.04 MT. For the period April 2020 and February 2021, India’s cumulative production of crude steel stood at 93.1 MT. Also, during the period April 2020 to February 2021 the crude steel production stood at In November 2020, the Steel Authority of India Limited (SAIL) reported 7% YoY growth in crude steel production.
Export and import of finished steel stood at 8.42 MT and 6.69 MT, respectively, in FY20. Export and import of finished steel stood at 9.49 MT and 4.25 MT, respectively, between April 2020 and February 2021. India’s per capita consumption of steel grew at a CAGR of 4.43% from 46 kg's in FY08 to 74.10 kg's in FY19.
Government has taken various steps to boost the sector including the introduction of National Steel Policy 2017 and allowing 100% Foreign Direct Investment (FDI) in the steel sector under the automatic route. According to the data released by Department for Promotion of Industry and Internal Trade (DPIIT), Indian metallurgical industries attracted Foreign Direct Investment (FDI) to the tune of US$ 14.24 billion between April 2000 and September 2020.
The Government’s National Steel Policy 2017 aims to increase the per capita steel consumption to 160 kg's by 2030-31. The Government has also promoted policy which provides a minimum value addition of 15% in notified steel products covered under preferential procurement.
In 2019, the Government introduced Steel Scrap Recycling Policy with an aim to reduce import.
In January 2021, the Ministry of Steel, Government of India, signed a Memorandum of Cooperation (MoC) with the Ministry of Economy, Trade and Industry, Government of Japan, to boost the steel sector through joint activities under the framework of India–Japan Steel Dialogue.
Under the Union Budget 2020-21, the government allocated Rs. 39.25 crore (US$ 5.4 million) to the Ministry of Steel. In December 2020, the Minister for Petroleum & Natural Gas and Steel, Mr. Dharmendra Pradhan, has appealed to the scientific community to Innovate for India (I4I) and create competitive advantages to make India ‘Aatmanirbhar’. In September 2020, the Ministry of Steel prepared a draft framework policy for development of steel clusters in the country. On October 1, 2020, Directorate General of Foreign Trade (DGFT) announced that steel manufacturers in the country can avail duty drawback benefits on steel supplied through their service centers, distributors, dealers and stock yards. Government introduced Steel Scrap Recycling Policy to reduce import. An export duty of 30% has been levied on iron (lumps and fines) to ensure supply to domestic steel industry. Government of India’s focus on infrastructure and restarting road projects is aiding the demand for steel. Also, further likely acceleration in rural economy and infrastructure is expected to lead to growth in demand for steel.
The Union Cabinet, Government of India approved the National Steel Policy (NSP) 2017, as it intend to create a globally competitive steel industry in India. NSP 2017 envisage 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steel consumption by 2030-31. The Ministry of Steel is facilitating setting up of an industry driven Steel Research and Technology Mission of India (SRTMI) in association with the public and private sector steel companies to spearhead research and development activities in the iron and steel industry at an initial corpus of Rs. 200 crore (US$ 30 million). The Government of India raised import duty on most steel items twice, each time by 2.5% and imposed measures including anti-dumping and safeguard duties on iron and steel items.
Steel industry and its associated mining and metallurgy sectors have seen major investments and developments in the recent past.
According to the data released by Department for Promotion of Industry and Internal Trade (DPIIT), the Indian metallurgical industries attracted Foreign Direct Investment (FDI) to the tune of US$ 14.24 billion in the period April 2000-September 2020.
In March 2021, JSW Steel completed its takeover of debt-ridden Bhushan Power and Steel Ltd., boosting to the former’s overall output to 21.5 mtpa. JSW Steel’s has 18 mtpa of capacity, which will hit more than 26 mtpa with the addition of BPSL and a doubling of capacity at JSW Steel’s Dolvi steel mill to 10 mtpa. In March 2021, Arcelor Mittal Steel signed Rs. 50,000 crore deal with Odisha government to setup a steel plant in the state.
In February 2021, Tata Steel BSL collaborated with Far Eye, a software logistics firm to improve its digital transformation process. In a move towards becoming self-reliant, Indian steel companies have started boosting steel production capacity. To this end, SAIL announced doubling of its at 5 of its steel plants capacity in September 2020. In March 2020, Arcelor Mittal Nippon Steel India (AM/NS) acquired Bhander Power plant in Hazira, Gujarat from Edelweiss Asset Reconstruction Company. In February 2020, GFG Alliance acquired Adhunik Metaliks and its arm Zion Steel for Rs. 425 crore (US$ 60.81 million), marking its entry into the Indian steel market.
For FY20, JSW Steel set a target of supplying around 1.5 lakh tonnes of TMT Rebars to metro rail projects across the country. In December 2019, Arcelor Mittal completed the acquisition of Essar Steel at Rs. 42,000 crore (US$ 6.01 billion) and formed a joint venture with Nippon Steel Corporation. JSW Steel has planned a US$ 4.14 billion capital expenditure programme to increase its overall steel output capacity from 18 million tonnes to 23 million tonnes by 2020. Ministry of Steel plans to invest US$ 70 million in the eastern region of the country through accelerated development of the sector. The production capacity of SAIL is expected to increase from 13 MTPA to 50 MTPA in 2025 with total investment of US$ 24.88 billion. Tata Steel has decided to increase the capacity of its Kalinganagar integrated steel plant from 3 million tonnes to 8 million tonnes at an investment of US$ 3.64 billion.
The National Steel Policy, 2017 envisage 300 million tonnes of production capacity by 2030-31. The per capita consumption of steel has increased from 57.6 kgs to 74.1 kgs during the last five years. The government has a fixed objective of increasing rural consumption of steel from the current 19.6 kg/per capita to 38 kg/per capita by 2030-31.
As per Indian Steel Association (ISA), steel demand will grow by 7.2% in 2019-20 and 2020-21.
(That Mean's Steel Sector Having a Potential to Increase the Value of Money in Few Time).
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