At the onset of the twentieth century, industrialisation drove economies and granted a first-mover advantage to countries with substantial metal industries. Today, metals remain instrumental in driving industrialisation. For instance, as of October 2021, India held the second-largest producer title for crude steel worldwide, producing 9.8 MT. Moreover, in FY22 (until January), India’s crude steel and finished steel production reached 98.39 MT and 92.82 MT respectively. Notably, per capita steel usage in India rose by 10% in the financial year 2021-22, reaching 77 kg.
Status Report: India’s Share in Metal Exports
India broke records in the 2021-22 fiscal year by exporting a whopping 13.5 million tonnes of finished steel. This was facilitated by a record production of over 120 million tonnes of crude steel and 113.6 million tonnes of finished steel, according to provisional estimates.
Growth Drivers and Significance of the Indian Steel Sector
The Indian steel sector’s growth has been spurred by the domestic availability of essential raw materials like iron ore and cost-effective labour. Consequently, the steel sector has significantly contributed to India’s manufacturing output. The Indian steel industry is modern, boasting state-of-the-art steel mills and consistently aiming for continuous modernisation of older plants and higher energy efficiency levels.
Role of Steel and Expectations for the Future
Historically, steel has dominated among metals due to its role as a raw material and intermediate product. Its production and consumption often indicate economic progress and industrial development. The metals and mining sector in India is expected to undergo major reform in the coming years due to initiatives such as the Make in India Campaign, Smart Cities, Rural Electrification, and a focus on renewable energy projects.
Challenges in the Indian Metal Industry
Some challenges plaguing the Indian metal industry include substantial capital investments, particularly for iron and steel production, which can be difficult for a developing country like India. Low productivity and potential utilisation, excessive demand leading to imports, and inferior product quality due to weak infrastructure and other factors also present significant hurdles.
Government Initiatives for the Metal Sector
The government has introduced several initiatives to support the metal sector, including the National Steel Policy (NSP) 2017, the Steel Scrap Recycling Policy, PLI Scheme For Specialty Steel, and Mission Purvodaya. Furthermore, the establishment of a “Sustainable Development Cell” in the Ministry of Coal aims to encourage better environmental management practices in coal mines.
Strengthening Domestic Capability and Way Forward
It is critical to bolster domestic capability through technological development and innovation, contributing to the growth of the Indian metal and metallurgy sector and helping India become a global manufacturing hub for metals and metal products. It is also crucial to address the need for developing mineral reserves in the country, especially minerals crucial to economic development.
Role of Industrial Associations and Cost Reduction Strategies
Other ways to advance the industry include encouraging industrial associations to inform rural populations about government schemes and running skill development programs. Introducing technology and smart working practices can significantly reduce costs. Moreover, India’s comparative advantage in steel production due to high-grade iron ore, robust domestic demand, and a young workforce makes it a potential player in realising the ambitious plans of Self-Reliant India and achieving a USD 5 trillion economy by 2024-25.
Potential for Growth
Due to India’s comparatively low per capita steel consumption and expected rise in consumption owing to increased infrastructure construction, the thriving automobile and railways sectors offer tremendous scope for growth.
