Amidst global steel pressure due to sluggish demand in developed nations, ever wondered why India’s steel industry keeps flourishing?
Steel is an essential metal that is used in many different industries. It plays a crucial role in helping a country’s economy grow. For example, steel is vital for big projects like making roads, bridges, railways, and airports.
Steel has always been a top metal choice. Making and using steel is a way to measure how well a country’s economy is doing. This is because steel is used as both a raw material and while making an intermediate product. So, we can say that the steel industry has the most significant impact on industrial growth and is a key part of any economy.
Now, talking about India’s steel industry. Even though there has been some pressure on steel production worldwide, India’s steel production keeps increasing steadily.
Let’s find out what factors are helping this industry keep growing.
According to The Hindu’s report, global steel production during the first five months of this year decreased by 1% compared to the same period last year. This drop is mainly due to lower demand from developed countries’ manufacturing and construction industries. This has caused significant challenges for major steel producers worldwide. However, India presents a different picture.
During the same timeframe, India’s steel production increased by 3.2% annually. This is a positive sign for the industry.
The classification of the Indian steel sector involves three distinct groups: primary producers, secondary producers, and large producers.
India holds the position of being the world’s second-largest producer of crude steel. In the fiscal year 2023, India produced 125.32 MT of crude steel and 121.29 MT of finished steel, according to the Indian Brand Equity Foundation (IBEF). It is projected that India’s steel production will further rise by 4-7%, reaching 123-127 MT in the fiscal year 2024.
Factors Driving the Industry
Did you know that steel production in India has increased by 75% since 2008, and the demand for steel within the country has risen by almost 80%?
Over the past 10 to 12 years, the steel sector in India has expanded significantly, and at the same time, the capacity to produce steel has also increased.
This strong demand and growth for steel in India is predicted to continue. Rajesh Mohota, the CEO and executive director of Jindal Lifestyle Ltd, shared with Business Line that this growth is expected to be fueled by infrastructure projects, planned capital expenditure, and India’s natural economic growth of 6-7%.
Several factors have contributed to the growth of the Indian steel sector. The availability of materials like iron ore within the country and cost-effective labour have played important roles. Additionally, the Indian steel industry is staying up-to-date with technology through modern steel mills. The industry has always supported the modernisation and improvement of older plants.
Importance of Industry in the Indian Economy
The steel industry is directly linked with several crucial sectors like infrastructure, construction, equipment manufacturing, and the automotive industry. As India’s economy grows, this industry contributes to its development and generates job opportunities.
Both foreign and local investments play a role in advancing this industry. Consequently, the steel sector holds significant importance in the Indian economy, influencing various sectors in meaningful ways.
In the fiscal year 2023, the demand for steel in India reached approximately 120 million metric tonnes. According to a report from Statista, it is projected to increase by 7.5% in the fiscal year 2024.
Furthermore, the government has given the green light to the Production-Linked Incentive (PLI) program for speciality steel. This move is expected to draw an investment of Rs 42,500 crore (equivalent to US$ 5.19 billion), leading to an additional capacity of 26 million tonnes in downstream production, as reported by the Indian Brand Equity Foundation (IBEF).
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
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