Indian Steel Sector Can Provide Economic Boost
Introduction
As the Industrial Revolution in 18th Century, steel sector has been an important component for economic growth. Steel has uses in various sectors like automobile, infrastructure, manufacturing, construction, etc. thus, it is an important factor for driving India’s GDP growth. In FY2020-21, India is the second-largest producer and consumer of crude oil and finished steel. According to World Steel Association(WSA), Tata Steel, SAIL, and JSW Steel were in the top 25 steel producing companies in 2020. In 2021, India produced 96.9 million tonnes of crude steel, up 20.6% year-on-year.
In India, steel has an output multiplier effect of nearly 1.4x on GDP and an employment coefficient of 6.8x. Steel sector provides 20,00,000 jobs in the country. India’s GDP raaising at 8.4% in the latter half of the year 2020-21. RBI expects the real GDP growth at 9.5% for FY2020-21. The involvement of the steel industry to India’s economy is around 2%. The growth in steel sector is expected to improve the economic growth rate of India.
Steps to Boost Economic Growth
In the last few years, the Government has passed reforms for the growth of the steel industry in India. Some of the mends are as follows:
FDI: The Government of India has allowed 100% FDI via an automatic routes for the steel sector in India.
National Steel Policy (NSP): It points to creating a well-developed and highly competent steel industry to uplift economic growth through steps such as meeting steel demand through the availability of raw materials domestically. The Policy also aims, among others, to increase the per capita steel consumption from 74.1 kgs (2018-19) to 160 kgs by 2030-31 and to grow the steel-making capacity from 142 MT per annum (MTPA) (2018-19) to 300 MTPA in 2030-31.
Steel Scrap Recycling Policy: The Government informed the SSRP to provide guidelines for steel scrapping centres in India. The structure provides guidelines on scrap segregation, collection, processing, etc. in a scientific manner. This is to recycle and reuse scrap to generate high-quality steel. This will ensure more steel production and, reduce dependency on imports.
Domestically Manufactured Iron and Steel products Policy: This policy directs providing choice to DMI&SP with a minimum of 15%-50% value addition in Government procurement. The policy is applicable to iron & steel products supply having collected estimate value of Rs. 25 crores or more and not applicable to products not manufactured in the country or in the required quantities. This policy is also helping with the import substitution of steel
Future of Steel Sector in India 2025
Future of Steel Industry in India 2025
There is a great scope for the Indian steel sector. The call for better quality steel products is expected to be met domestically, due to capacity increases and R&D investments. The green push is contemplated to make steel production cleaner and cheaper.
Given the various applications for steel, the steel industry is crucial. The recovery after the pandemic is highly positive for the construction and infrastructure sectors. This is coupled with the government reforms which is adding to the growth. Due to the rising interest in Electric Vehicles, the automobile sector is anticipated to add to the steel demand. Indian steel demand is expected to rise to 170 MT by 2025 and capacity is expected to reach 180-190 MT. Further, the Government expects India to be a US$ 5 trillion economy by 2025. Given all these facts, the future of the steel industry in India seems bright and the steel sector is anticipated to provide a fillip to the Indian economy.
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