Fromhere to where?
TheIndian Steel Industry is poised for a robust future, writes Pankaj Jain.
Somepersistent questions that occupy the minds of individuals in the steel industryinclude: Is the Indian Steel Industry poised for a transformative growth phase?What are the potential challenges and opportunities for the Indian SteelIndustry in the context of evolving consumer preferences and market trends? Isthe realization of the National Steel Policy on the horizon? And, what specificchallenges does India need to address and overcome to successfully achieve itsstated goals and objectives?
Priorto delving into the queries that may arise for those involved in the steelindustry, let us initially explore the historical progression of the IndianSteel Industry since independence.
TheIndian Steel Industry has undergone a remarkable transformation since thecountry gained independence in 1947. At the time of independence, the steelsector was in its nascent stage, with limited production capacity andtechnological capabilities. The establishment of the first steel plant inJamshedpur in 1907 marked the beginning, and post-independence, the industrysaw gradual expansion.
Thefinished steel production in India grew from a mere 1.1 million tonnes in 1951to 29.27 million tonnes in 2000-2001. Today, India boasts having become thesecond-highest producer of crude steel globally, achieving an annual output ofapproximately 120 million tonnes.
Theindustry has diversified, adopting advanced technologies, and witnessedsubstantial growth in both production and consumption. It has, in fact, becomea key contributor to the country's economic development, supporting varioussectors such as infrastructure, construction, and manufacturing.
Movingforward, in alignment with the guidelines outlined in the National Steel Policy(NSP), the Ministry of Steel has established an ambitious target to attain acapacity of 300 million metric tonnes per annum (MTPA) and a production outputof 255 MTPA by the year 2030. Envisioning the future, it is anticipated thatthe demand will surge to three to four times the current levels by the year2040.
Inmy perspective, the Indian Steel Industry is poised for a robust future, andthis optimism is underpinned by several factors:
Government Support (Policies)
Government-driveninitiatives, exemplified by policies like the National Steel Policy and 'Makein India’, play a pivotal role in creating a favourable environment for thegrowth of the steel industry. These policies not only offer a strategic roadmapbut also establish a robust regulatory framework, encouraging increasedinvestment and fostering overall development within the sector.
Theindustry is witnessing numerous Greenfield and Brownfield expansions as adirect result of these proactive measures.
Infrastructure and Urbanization (Demand Surge)
Theupswing in demand is propelled by ambitious infrastructure projects and thepersistent trend of urbanization. As India channels significant investmentsinto expansive infrastructure developments, the demand for steel in variousconstruction and related activities is witnessing a substantial rise. Thissurge is evident across diverse domains, including roads, railways, airports, andgeneral infrastructure projects, underscoring the indispensable role of steelin shaping the nation’s modern landscape.
Automotive Growth (Sectoral Demand)
Theautomotive industry, especially the surging electric vehicle segment, emergesas a pivotal driver for the steel sector. As growth extends across diverseautomotive realms, encompassing both, internal combustion and electric enginetechnologies, India's automotive sector is on the brink of significantexpansion, reinforcing the pivotal role of steel in shaping its dynamic future.
Global Opportunities (International Presence)
India’sambitions to establish itself as a global steel player create lucrativeopportunities in the international market. The augmentation of productioncapabilities coupled with a steadfast commitment to maintaining stringentquality standards positions the Indian Steel Industry as a formidablecompetitor on the global stage. Gradually evolving into a manufacturing hub, Indiais emerging as an alternative to Chinese suppliers and, increasingly, a keysupplier to the world.
Technological Advancements (Efficiency andSustainability)
India'ssteel industry has undergone a significant transformation, with mills nowoperating at high efficiency and productivity while embracing environmentalsustainability. The integration of Information Technology (IT) for automationand digitization has further heightened competitiveness by streamliningoperations and ensuring precision in manufacturing processes. Thistechnological evolution positions the industry as a dynamic player on theglobal stage.
Rising Consumption (Per Capita and Middle-ClassGrowth)
Whilethe per capita consumption of steel remains low, the strengthening middle classis poised to generate robust and sustained domestic demand. As living standardsimprove, the use of steel in diverse applications, spanning from householdgoods to construction, is expected to escalate. The substantial Indianpopulation stands out as a key driver for future growth in the steel industry.
Innovation Focus (Value-Added Products)
Indiansteel mills are actively implementing strategies that involve diversificationinto value-added sectors, such as defence, aerospace, engineering, and oil andgas. The industry is consistently prioritizing innovation and importsubstitution to proactively meet the evolving needs of the market. This ongoingapproach will not only enrich the industry's product portfolio but also willensure adaptability to changing consumer preferences.
Thefollowing additional measures can further solidify the position of companies inthe Indian Steel Industry on the global stage:
Invest in Research and Development
Makeroutine investments in research and development to foster innovation. Thiscommitment can result in the creation of advanced technologies and high-valuesteel products, ultimately enhancing global competitiveness.
Global Market Intelligence
Maintaina keen awareness of global market trends, demands, and supply chain dynamics. Acomprehensive understanding of international markets empowers strategicdecision-making and ensures adaptability to evolving conditions.
Invest in Skills Development
Activelyinvest in developing and enhancing the skills of the workforce to meet globalindustry standards. A highly skilled workforce serves as a valuable asset,propelling innovation and ensuring the maintenance of high-quality production.
Make the Supply Chain Management Lean
Tooptimize efficiency and competitiveness, steel companies can adopt a leansupply chain management approach. This involves leveraging advanced analyticsfor accurate demand forecasting, implementing just-in-time inventory practices,fostering strong supplier relationships, and optimizing logistics through technologyintegration.
Continuousimprovement, risk management, and cross-functional collaboration are crucialcomponents, along with ensuring real-time visibility into the supply chain. Integratingsustainability practices and prioritizing information sharing contribute tocreating an agile and efficient supply chain, enhancing the overallcompetitiveness of steel companies in the global market.
Conclusion
Thepromising trajectory of the Indian Steel Industry is intricately linked to acomprehensive strategy. This strategy includes strong government support,responsive measures to sector-specific needs, a proactive global stance,cutting-edge technological advancements, and a strategic focus on innovationand expansion. This holistic approach not only positions the industry forcontinuous growth but also strengthens its competitive standing, ensuring adynamic presence in both domestic and international markets. The synergisticcombination of these elements positions the Indian Steel Industry to navigatechallenges adeptly and capitalize on opportunities, shaping a resilient and thrivingpath in the constantly evolving global landscape.
The author of the article is a Writer, Speaker,Trainer, and Upcoming Author. He is in the final year of his PhD Scholarship inthe field of Steel. He is a Special Steels Supply Chain Management Expert.
“Integratingsustainability practices and prioritizing information sharing contribute tocreating an agile and efficient supply chain, enhancing the overallcompetitiveness of steel companies in the global market.”
- PankajJain,
Founder Partner and CEO,
BlueOceanSteels.