Steel, being a core sector is a long race horse that runs the cumulative growth in India. All segments of market like automobiles, infrastructure, defence and research drives the increasing demand for steel production in India for its own domestic consumption as well as export. India enjoys a good geographical location which is rich in iron ore and engages cheap labour. Moreover, Indian government have reduced restrictions over business and affairs related to steel. The current increase in India’s ranking in Ease of Doing Business from 100 in year 2018 to 77 in year 2019 justifies the phenomenal success of steel industry.
India hosts the leading integrated stainless steel manufacturers who produces steel via blast furnace (BF) or the direct reduced iron (DRI) route. But nearly one-third non-integrated steel manufacturers are producing steel by scrap smelting which increase the import demand of steel scrap. That’s why there is 11% increase in steel import in the first quarter of FY19 according to ICRA reports, but this be minimized by placing antidumping duties by government and promoting domestic MSME companies. Better competitive prices offered by Indian companies to global buyers and depreciation of Indian rupee against USD in the recent months seems to stimulate our export sales.
With the Indian government initiative to promote foreign trade and foreign direct investment (FDI), shipping and logistics companies are also blooming at par with globalisation. For every business to prosper, experts ensure timely and proper delivery of goods and services to the consumer at first priority basis. But simultaneously they make sure that heavy shipping costs are not eating out their estimated profits. India, hence therefore provide a balanced solution to business tycoons via its affordable and professional shipping service providers.
Though there is a substantial dip in steel demand due to slow down in real estate and automobile sector but still a hike in demand can be seen ahead of upcoming festive season and government’s move to cut down corporate taxes and associated measures taken to boost automobile industry. FY18 proved to be pretty good for Indian stainless manufactures as steel demand rose by 6% and production went up by 7.5 % in comparison to FY17. Though, the forecasted demand for the session FY19-FY20 seems quite favourable for Indian Steel Industry but still the investors and capitalists are keeping their fingers crossed due to uncertainty in demand evoked by US- China trade war and fluctuating nickel prices internationally.
Our steel industry is also facing some of the challenges listed below:
- Lack of capital and technology.
- Low productivity
- Inefficiency of public sector units.
- Heavy demand
- Insufficient metallurgical coal.
- Lower potential utilisation.
- Inferior quality of products.
These issues need to be addressed seriously by GOI (govt. of India), and one of the possible solution is investing in research and technology related to steel sector, which in turn will surely bring significant returns by unclogging of stalled projects of real state, infrastructure and automobile market. Banking sector can also help in prospering steel industry by lending at cheaper interest rates, compensating NPAs (non-performing assets) and converting debt into equity at a cheap price.
Eresh Sharma
The author is a Sales Engineer with Ambica Steels Limited. In his free time, he likes to write blogs and articles on Materials Science and Engineering, Technology, Steel Industries, Lifestyle and much more.
