Dogged for years by raw material and process related problems and labels of poor quality, India’s steelmakers are undergoing a makeover. Will this take the industry to its potential place at the top? Read on to find out.
The Indian steel industry seems all set for an explosion. Though metal work of exceptional quality has been part of India’s history (case in point: the iron pillar of Mehrauli), and steel has been made in south India since ages, the post-independence steel industry has only just woken up.
You need lots of steel for growth today. Even if steel costs you more initially, it is stronger, takes less maintenance, and lasts much longer than other metals. The steel needs to be of uncompromising quality for industrial needs. High-grade coking coal is needed for making steel, which India did not have. Importing it was expensive so this prevented the industry from reaching its true capacity. Several manufacturers, in an attempt to keep costs low, make poor quality steel. But things have changed drastically in India now.
The world needs over a billion tons of steel each year and China is the world’s largest producer and consumer of steel. India is estimated to have about 14 billion tons of iron ore, but produces just 60 million tons of steel per year. With the arrival of new processes that do away with coking coal, most firms are expanding their capacities. With Tata Steel acquiring Corus, they are also signaling aggressive marketing intent.
Indian steel minister Ram Vilas Paswan recently stated that the industry is investing US$ 1 billion per additional million tons of production capacity and that SAIL plans to upgrade to 24 million tons and other majors to 10 million tons over the next few years. You will see an increase in steel production to 175 million tons by 2012 and 275 million tons by 2020. India is the world’s 5th largest crude steel maker today and aims for the 2nd rank by 2016.
What according to you is the reason for the boom in the Indian steel industry? Does this phenomenon indicate India’s emergence as a superpower in the next few decades?