JSW Steel expects the current headwinds on the horizon to pose a few temporary challenges, but the long-term story of India’s steel industry remains intact and the country’s position as one of the largest steelmakers in the world will get further fortified.
Speaking at the company’s annual general meeting on Wednesday, Sajjan Jindal, Chairman, JSW Group said that backed by a favourable investment climate, conducive policies, and inherent structural strengths of the economy, India is well-poised to grow rapidly and become a crucial part of the global supply chain, with steel playing a pivotal role in this evolving growth story.
‘Escalating geopolitical tensions’
Today, however, the world appears to be somewhat on the edge as it enters the post-pandemic era with escalating geopolitical tensions and re-alignment of supply chains. Inflation is at elevated levels and global trade is in a bit of a quandary, stoking stagflation fears and prompting policymakers to engage in a balancing act, to ensure that they do not fall behind the curve, he said.
While India is not immune to these global challenges, the country does seem to be more resilient. Although inflation is above comfort levels and supply-side concerns remain, Jindal said he believes these are short-term pains that are likely to subside in a few quarters. The Indian government has undertaken several fiscal measures, while the central bank has turned more hawkish, effecting two successive rate hikes, to counter inflation.
The current macro challenges notwithstanding, the future of the Indian steel industry is healthy, with demand expected to grow at a steady rate through the decade.
Global steel trade
Further, as a cost-competitive exporter of steel, India has an opportunity to take on a larger role in the global steel trade, aided by the government’s continued thrust on manufacturing-led growth and merchandise exports. In that context, he said the export duties imposed on steel in May as a significant, but short-term headwind.
“We continue to engage with the government on this matter and believe that the duties were imposed only to rein in inflation and will be withdrawn once inflation moderates. The steel industry through the Indian Steel Association is constructively engaging with the government on this matter,” Jindal said.