Enabling India\\\'s steel to steal the show

Good going indeed - during the first five months of this calendar year, India has achieved the third position in the global steel production. The country envisages achieving a steel production of 300 million tonnes by 2025, and the steel ministry is working out an action plan and strategies to achieve this target.
India is now the fourth largest steel producer in the world only after China, Japan and the US, as against its 8th position in 2003. India continues to maintain its lead position as the world's largest producer of Direct Reduced Iron (DRI) or Sponge Iron. What is the exact position now?
Actually, after a disastrous run in the last decade and also the initial years of this decade, the country's steel sector has clearly rebounded - top global companies evincing keen interest in putting up large integrated units here.
If the current trends are of any indication, global steel capacity is likely to continue to grow since a number of governments have been continuously encouraging investors in the steel industry mainly to meet the infrastructure needs. Strong demand is also emanating from the industrial sector's expansion.
Thanks are, therefore, due to the booming infrastructure in the emerging economies especially.
Now, the steel sector contributes by nearly 2.0 per cent of India's GDP and employs over 600 thousand people. Going by the current estimate of Rs. 40 billion investment per million tonne of additional capacity, the steel sector is expected to witness an estimated investment of Rs. 8706.40 billion by 2020.
It is good to observe that the older steel plants are being modernised and expanded. The recently opened India's largest blast furnace with a capacity of 4,160 cubic metres at IISCO steel plant in Burnpur, West Bengal, adds further hopes indeed. Major private steel companies have also signed MOU with the steel ministry for Steel Research & Technology Mission of India (SRTMI) and will financially contribute the initial corpus of Rs. 2.0 billion.  
It has been a fact that India continues to be a low steel consuming country at just 60 kg per capita compared to the world average of 216 kg.  Though the per capita consumption of total finished steel in the country has risen from 51 kg in 2009-10 to around 60 kg in 2013-14, yet the low consumption, in turn, indicates huge growth potential for the Indian steel industry.
Thrust is there on the part of the government, especially in the area of research and development (R&D). Indian steel industry's R&D has to focus more on producing value added products to lessen imports. It has rightly been identified that to sustain the long-term growth of the Indian steel industry, problems in the area of raw materials need to be addressed to utilise low-grade ore and high-ash coal through R&D and technology interventions.
To give an impetus to R&D (research and development) of national importance, the Ministry of Steel is contributing up to 50 per cent of the corpus required for setting up the new institution SRTMI (Steel Research & Technology Mission of India).  The government has also issued an advisory to all the large steel companies to step up R&D and enhance investment in it by up to one per cent of their sales turnover. SAIL has its corporate R&D centre at Ranchi. RINL is also expanding the R&D infrastructure. Large private sector companies have also set up good R&D facilities for addressing their problems.
SAIL (Steel Authority Of India Limited), one of the able 'maha nabaratnas', has been doing pioneering works on this score.  The steel giant has its presence felt in over 600 districts of the country through its network of stockyards. It is on an aggressive drive to expand its market reach across the country as well. The company had been building its dealer networks and also setting up new stockyards in the country. In order to make its steel available at the doorsteps of customers, and increase the steel consumption in rural areas, it was setting up such stockyards in states like Jharkhand and Bihar. SAIL also had the right objective to set up mills near consumption centres -- in states where it had no manufacturing presence. This would definitely help the company to expand the reach.  
Accordingly, the steel ministry has decided to set up a total of ten steel processing units across the country, and each such unit is slated to come up near consumption centres in the industrially backward districts. In this case the processing unit (mills) will be using the basic steel manufactured by the big plants of SAIL and then converting the same into items of use.
Though SAIL would take up this initiative of its own without creating a different company for execution of the same, yet TATA Steel, the competent largest private sector steel company, set up a separate joint venture company to spearhead the initiative of setting up such steel service centres.
However, on this score the OECD analyses must be taken very seriously inasmuch as it has cautioned of the growing risks to the international steel market. The indication clearly states that while world demand for steel continues to expand favourably, growing economic risks associated with housing market and other related problems cloud the outlook at least partially. Continued capacity expansions as observed in many parts of the world could well impact on the price front if demand growth slows down significantly. As capacity expansion continues to be there, abrupt slowdown in global demand has the potentialities to create trade friction to the detriment of the long-term health of the steel industry.
The future success of the steel industry obviously depends on the ability to manage the entire supply chain - right from backward integration to forward linkages. The importance of downstream products is also no less - ball bearing rings, alloy steel bearings (used in two-wheelers, fans and motor pumps), ferromanganese and ferrochrome, cold rolled steel products, galvanised steel sheets, etc. Steel is and will be in much demand in the sectors like the aerospace, construction, automotive, railways as well as consumer products.
Last but not least, though the large-scale operations would help in getting a footprint in newer markets (viz. the US, Europe and Canada), it should not be forgotten that raw material availability continues to be a matter of big concern. Acquiring of more iron ore and coal mines around the world is no child's play. In fact, the raw materials' prices in the recent past have risen to new heights as steel production continues with the upswing trends.
This is high time that a reasonable decision was taken in so far as the export of India's ore reserves was concerned. The country's own demand has been and would be going up in the coming years. Quality of ores (hematite variety especially) is also one of the bests. Then why not steadily put an end to the export of such items. The mineral policy should be a realistic one. But till now nothing of that sort in comprehensive sense has clearly been seen. It is time that before entering into long-term contracts, India must be able to project and realise its position.  
It is better to conclude in line with the World Steel Association, "From dawn to dusk, steel surrounds our daily lives. Whether you're waking up, keeping time, getting in or logging on, steel is there making your everyday activity possible."
Dr. B. K. Mukhopadhyay, a Management Economist,
is attached to West Bengal State University.
 [email protected]