The world steel industry is going through a low growth period. In face of this sluggish global growth, the Indian steel industry is showing some positive trends. Stats released by worldsteel show that India is now the second largest steel producer the world over and one the fastest-growing steel markets. Recently, the Indian steel market overtook one of the key steel producing nations – Japan. India’s growth rate was around 5% towards the end of December 2018.
The Indian steel industry has recovered from the twin shocks of GST (Goods and Services Tax) and demonetization pretty well. The growth in steel manufacturing is fostered by the surge in the demand for steel within the country. By end of 2019, India is expected to rank #2 in terms of steel usage and the steel demand will shot up to 7.3 %.
Here, we take a closer look at what’s fueling this high demand of steel in India:
Reasons for the Upsurge in Domestic Demand of Steel
Astudy conducted by worldsteel together with the Indian Steel Association reveals that the construction sector is the key driver for steel demand, which is backed by robust infrastructure advancement and a rise in the demand of affordable housing.
Several ongoing projects are reducing logistical costs pertaining to transportation between Indian states by improving the nation’s connectivity. There are many industrial corridors which are being expanded to link existing industrial cities and enlarge different manufacturing sectors. Then there is the Sagarmala project that is connecting states via waterways. Also, the Smart Cities initiatives that aim to develop 99 smart cities further boost investment in urban infrastructure.
As the Steel Secretary of India, Binoy Kumar explains, the huge domestic demand could fuel an increase in steel imports, which is obviously not desirable. Thankfully, the Indian Steel Industry looks capable of meeting the domestic needs – our steel production is keeping pace with the high demand.
However, industry experts worry that India has become a key steel importer besides being a top producer. Binoy Kumar says that the increase in imports is owing to specific sectors, mainly the auto sector and also the electrical sector. Although India is fully capable of producing auto grade steel, the auto industry still prefers sourcing their steel from Japan and South Korea. But then again, India aims to be a global manufacturing hub for small cars and focus on exports. Hence, automobile and auxiliary industries are developing in many states, which in turn will support homegrown steel companies in future.
Another popular initiative, the Make in India initiative, intends to transform India into a global manufacturing and design centre, and this is definitely benefitting the growth of the Indian Steel Industry.
All the factors indicate that India has great potential to develop its steel sector. Proper infrastructural plans and reform agendas will decide how well this potential is realized. MSP Steel, one of the top steel manufacturers in India with a pan India presence, is on a fast track to develop India’s infrastructure. With the best tmt bars and a range of other high-quality products, this steel company is actively contributing towards a strong foundation for new India.
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