The State of Steel Industry in India and its Future Prospects

India is the fifth largest steel-producing nation in the world. The Indian steel industry accounts for over 7% of the world's total steel production. The domestic crude steel production grew at a compounded annual growth rate of 8.6% during 2004-2005 to 2008-2009. The National Steel Policy of the Government of India has a target for taking steel production up to 110 MT by 2019-2020. While 2007 was an exciting period in the history of Indian steel industry, corresponding to 7% growth over 2006; 2008 witnessed an unprecedented global economic meltdown with only a marginal growth of 3.7%. Consumption declined, in fact, from July 2008 onwards. However, 2009 was a year of great resilience and recovery for the Indian steel industry. For April December 2009, the provisional data released by Joint Plant Committee indicates a 7.8% rise in consumption of total finished steel. World Steel Association forecasts India's Apparent Steel Usage (ASU) to increase at 13.9% during 2009-2010, over 2008-2009, to reach 63 MT compared to the forecast of 10.7% for The world and 6.7% for China for the same period. Similar figure for 2010-2011 over 2009-2010 stand at 13.7% for India, 2.8% for China and 5.3% for World. The prospective increase in the ASU figures are substantiated through a scrutiny of the consumption patterns in India. While the per capita demand in India, at around 50 kg, is nowhere near to the world average of around 150 kg, or, about 400 kg for developed countries; the rural India, at around 5 kg per person, lags even farther behind in comparison to urban India. However, in consideration of the extensive infrastructure development planned by the government in both rural and urban areas, these consumption figures have a strong scope to increase. Accordingly, a number of major Indian and Global steel players are into a massive capacity expansion mode in India, either through Brownfield or Greenfield route. On a conservative estimate, the steel demand in India is expected to touch around 90 MTPA by 2015 and around 150 MTPA by 2020. Steel supply is, however, expected to reach only around 88 MTPA by 2015 and around 145 MTPA by 2020.While the demand for steel will continue to grow in traditional sectors, specialized steel is also increasingly being employed in various hi-tech engineering industries. Globally, a relation can be observed between steel consumption and the GDP growth rate. Overall, India, being in a high growth phase with huge planned infrastructure development, is bound to witness sustained growth in the steel requirement in the years to come.