The iron and steel industry is one of the sunshine sectors in India and despite chronic handicaps like poor infrastructure continues to forge ahead.
According to a recent sectoral analysis by Frost & Sullivan, India will soon move up from fourth to second position in the world, both in terms of production and consumption of steel.
The injection of funds by the government into industries such as construction, infrastructure, automotive and power with a view to boost economic growth would drive the steel industry in the future, the Frost & Sullivan analysis said.
The steel sector contributes to nearly 2 per cent of India’s GDP and employs over five lakh people. In 2013, India became the fourth largest producer of crude steel globally, moving up from the eighth position in 2003.
India’s per capita steel consumption rose from 38 kg in 2005 to 59.2 kg in 2013 and crude steel production in the last 10 years increased from 31.8 million tonnes to 87.7 million tonnes at a CAGR of 10.7 per cent due to advancements in traditional steel making. The total installed capacity for crude steel production in 2013 stood at 102 million tonnes with capacity utilisation in the range of 80 per cent. The total capacity for 2015–16 is estimated at around 112.5 million tonnes. Indian finished steel production grew at a CAGR of 7.5 per cent from 51.4 million tonnes in 2008 to 73.7 million tonnes in 2013.
The Frost & Sullivan analysis highlighted India’s position as the world’s largest producer of Direct Reduced Iron or sponge iron and pointed towards the more than 300 MoUs with various states for planned capacity of around 488.56 million tonnes. The states of Odisha, Jharkhand, Karnataka, Chhattisgarh and West Bengal would witness major investment plans, it added.
The intended steel capacity buildup in the country was likely to result in an investment of Rs.5-10 trillion by 2020, the analysis said.
In India, more than 60 per cent of steel consumption has been traditionally driven by the construction and infrastructure sectors which registered the highest growth rates over the past five years among steel-intensive industries.
With steel demand driven by increasing infrastructure development and the automotive industry, the analysis expected steel consumption in the country to grow at a rate of 6.8 per cent, reaching 104 million tonnes by 2017. Taking into consideration investment opportunities in the steel sector, upcoming greenfield and brownfield projects as well as growth trends of the different end-user industries, it expected the country’s projected crude steel capacity to reach 140 million tonnes by 2016 from the capacity of around 100 million tonnes in 2013.
The analysis said the Indian iron and steel industry was already in the developed and consolidation stage in terms of the production process. However, it added, major domestic steel manufacturers were now in the process of implementation of information technology to streamline the entire value chain.
Drawing attention to the emerging competitive challenges being faced by steel manufacturers in reducing time-to-market, increasing manufacturing process visibility, enhancing production flexibility, optimising forecasting and scheduling, reducing rejects, stocks, and downtime and ensuring optimal quality, and production efficiency, the analysis noted that IT could play an important role in the areas of advanced planning and scheduling for production, entire metals supply chain management including raw materials and Manufacturing Execution Systems.