The Indian economy has grown to become the 5th largest in the world, from 10th, in the past nine years. In 2021, India was the sixth-largest economy, with GDP at $2.7 trillion. This is projected to grow to $8.4 trillion by 2030. As the size and scope of the economy continue to grow, steel demand is also expected to rise.

Union Budget 2023-24 has identified seven priority areas, which are inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power and financial sector. This, along with government’s continued focus on infrastructure development, including the ₹10-lakh crore Gati Shakti National Master Plan and the National Infrastructure Pipeline, will push up the demand for steel significantly.

Steel contributes more than 2 per cent to India’s GDP, and the country is the second-largest producer and consumer of steel since 2018. At 6 per cent CAGR, steel has been showing strong growth. The National Steel Policy-2017 envisages steel consumption increasing from 77.6 kg/capita to 160 kg/per capita, and a production capacity of 300 million tonnes, by 2030-31.

In a dynamic economy as India’s, where every sector is seeing consistent and quantum growth, the requirement of steel for a variety of applications is increasing. The steel industry is certainly a step ahead in the growth curve, but the country continues to import steel for niche applications.

Moving to the next level

The government is of the view that the sector can leap to the next level and be a prime player in the global value chain. To the credit of the industry, the imports, which constituted more than 10 per cent of domestic consumption, have fallen to about 5 per cent now. The Steel Ministry, on its part, has worked with the industry to to introduce various measures including R&D schemes, development of standards and enforcement.

Before conceiving PLI for steel, which is one of the 13 sectors covered by the scheme, the Ministry worked closely with DPIIT and NITI Aayog and other ministries which are major consumers of steel. With inputs from stakeholders, the PLI scheme could not have come at a better time as the global steel industry has shifted production and consumption towards Asia, with India playing a pivotal role. Post the tenure of the scheme, the capacity to produce specialty steel is expected to increase by around 25 million tonnes with a cumulative investment of around ₹30,000 crore in the next five years beginning FY 2023-24.

There is challenge, though — to align our standards with the new kinds of steel that are being developed rapidly. The Ministry of Steel and BIS are working closely to ensure all steel grades are covered under one standard or the other.

The PLI scheme, along with initiatives such as the Quality Control Order of the Steel Ministry, reveal that the country is on the path to self-reliance. The PLI scheme covers coated/plated products, high-strength/wear-resistant steel, specialty rails, alloy steel products, steel wires and electrical steel.

Range of applications

These products have a broad range of applications in the white goods, automobile and defence sectors, industrial machinery, and so on. PLI for specialty steel has brought the development of value-added steel to the forefront.

Apart from the major companies, many MSMEs and the secondary steel units have developed niche capabilities to export to foreign destinations. Foreign steel suppliers often take advantage of deficiency in production of a particular product in the importing country.

Dependence on imports to meet the demand for specialty steel in the emerging geopolitical scenario can have serious implications in case of any supply chain disruption for critical sectors of the Indian economy. The specialty steel imported commands higher value than steel grades exported from India. The average cost of all categories of finished steel imports during April 2022-February 2023 is around ₹1,07,000/tonne as against the average export realisation of ₹83,000/tonne.

It is essential to consider the consumers of specialty steel when discussing its production. Expanding the production and consumption of capital goods within the country, increasing the focus on quality and improving testing facilities are other measures that will contribute to the demand for specialty steels.

PLI for the steel sector has received enthusiastic response from all segments of the industry. The Steel Ministry has selected 27 companies that will sign a Memorandum of Understanding in New Delhi, soon. These companies are projected to generate 55,000 jobs.

The government expects the PLI scheme for steel will make the entire manufacturing sector competitive and self-reliant.

The writer is Secretary, Ministry of Steel. Views are personal

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