MBA Aspirants are expected to know core Industry. This helps them to understand infrastructure base of India. Today, you will read on Indian steel industry
The Indian steel industry is more than a hundred years old, with the first integrated steel plant – Tata Iron & Steel - having been established in 1907. India is the fourth largest producer of crude steel in the world, after China, Japan, and the United States.
However, experts predict that this ranking will change, in view of the recent and upcoming investments in the Indian steel industry. And in a few years, India is expected to move ahead of the United States and Japan in terms of the production of crude steel.
The steel industry in India derives its demand from other sectors – infrastructure, engineering, construction, automobile, and aviation, to name a few. And when there is growth in the aforementioned sectors, the steel industry will inevitably grow. India Ratings and Research, one of India’s rating agencies, believes that the Indian steel industry will gain momentum next year with the growth of other economic segments.
On similar lines, the World Steel Association estimates that the demand for local steel will increase by 5.9% this year and 7% next year. Data published by the World Steel Association indicate that India’s steel production increased by 0.9% to 6.45 million tonnes in June 2013 as compared to 6.39 million tonnes in June 2012.
Also, India’s steel production increased by 2.5% to 39.63 million tonnes between January and June 2013, compared to the same period in 2012, when the figure for the six-month period stood at 38.68 million tonnes.
Some of the major players in the public sector of the Indian steel industry are the Steel Authority of India Limited, also known as SAIL, the Rashtriya Ispat Nigam Limited, also known as RINL, and the Metal Scrap Trade Corporation Limited.
In the private sector, some of the top steel companies are Tata Steel, Essar Steel, JSW Steel, and Jindal Steel. Even though the Indian steel industry seems to be thriving and experts predict that the industry will grow in the coming years, we witnessed the scraping of an ArcelorMittal steel plant in the country in July.
The steel industry is set to flourish, no doubt, but there are government inefficiencies that force companies to abandon their projects or leave the country. ArcelorMittal, the world’s largest producer of steel, was keen on setting up a Rp 522 billion (US$ 8.5 billion) steel plant in Orissa and it had signed an agreement with the Orissa government in 2006 to produce 12 million metric tonnes of steel on an annual basis.
However, even after seven years (in 2013), the company was neither given land nor allocated captive iron ore blocks. The company faced difficulties in getting environmental clearances, and bureaucratic delays, which eventually led to the closure of the deal.
So, for the Indian steel industry to flourish, it is important for the government to take steps to make the Indian business environment viable for investors. The government is working hard to attract investors to India to boost the economic growth of the country.
One way in which it is doing so is by increasing the foreign direct investment cap. Apart from that, the government should make its procedures more efficient. By doing so, the Indian steel sector will be able to flourish and may even move ahead of China, and earn the title of “the largest producer of steel in the world”.