Global Scenario
· In 2011 the world crude steel production reached 1518 million tonnes (mt) and showed a growth of 6.2 % over 2010. (Source: World Steel Association or WSA)
· China remained the world’s largest crude steel producer in 2011 (684 mt) followed by Japan (108 mt), the USA (86.4 mt) and India (72.2 mt; prov) at the 4th position (72.2 mt).
· The WSA has projected that global apparent steel use will increase by 3.6% to 1422 Mt in 2012, following growth of 5.6% in 2011. In 2013, it is forecast that world steel demand will grow further by 4.5% to around 1486 Mt. China’s apparent steel use in 2012 and 2013 is expected to increase by 4% in both the years. For India, growth in apparent steel use is expected to grow by 6.9% in 2012 and by 9.4% in 2013.
· Per capita finished steel consumption in 2011 is estimated at 215 kg for world and 460 kg for China.
Domestic Scenario
· The Indian steel industry has entered into a new development stage from 2007-08, riding high on the resurgent economy and rising demand for steel.
· Rapid rise in production has resulted in India becoming the 4 th largest producer of crude steel and the largest producer of sponge iron or DRI in the world.
· As per the report of the Working Group on Steel for the 12 th Plan, there exist many factors which carry the potential of raising the per capita steel consumption in the country, currently estimated at 55 kg (provisional). These include among others, an estimated infrastructure investment of nearly a trillion dollars, a projected growth of manufacturing from current 8% to 11-12%, increase in urban population to 600 million by 2030 from the current level of 400 million, emergence of the rural market for steel currently consuming around 10 kg per annum buoyed by projects like Bharat Nirman, Pradhan Mantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana among others.
· At the time of its release, the National Steel Policy 2005 had envisaged steel production to reach 110 million tonnes by 2019-20. However, based on the assessment of the current ongoing projects, both in greenfield and brownfield, the Working Group on Steel for the 12 th Plan has projected that the crude steel steel capacity in the county is likely to be 140 mt by 2016-17 and has the potential to reach 149 mt if all requirements are adequately met.
· The National Steel Policy 2005 is currently being reviewed keeping in mind the rapid developments in the domestic steel industry (both on the supply and demand sides) as well as the stable growth of the Indian economy since the release of the Policy in 2005.
Production..!
· Steel industry was delicensed and decontrolled in 1991 & 1992 respectively.
· Today, India is the 4 th largest crude steel producer of steel in the world.
· In 2011-12 (prov), production for sale of total finished steel (alloy + non alloy) was 73.42 mt.
· Production for sale of Pig Iron in 2011-12 (prov), was 5.78 mt.
· India is the largest producer of sponge iron in the world with the coal based route accounting for 76% of total sponge iron production in the country (20.37 mt in 2011-12; prov.):
· Last five year's production for sale of pig iron, sponge iron and total finished steel (alloy + non-alloy) are given below:
Indian steel industry : Production for Sale (in million tonnes)
| Indian steel industry : Production for Sale (in million tonnes) | ||||||||||
| Category | 2007-08 | 2008-09 | 2009-10 | 2010-11 | 2011-12* | |||||
| Pig Iron | 5.28 | 6.21 | 5.88 | 5.68 | 5.78 | |||||
| Sponge Iron | 20.37 | 21.09 | 24.33 | 25.08 | 20.37 | |||||
| Total Finished Steel alloy + non alloy) | 56.07 | 57.16 | 60.62 | 68.62 | 73.42 | |||||
| Source: Joint Plant Committee; *provisional | ||||||||||
Demand - Availability Projection
· Demand – Availability of iron and steel in the country is projected by Ministry of Steel in its Five Yearly Plan documents.
· Gaps in availability are met mostly through imports.
· Interface with consumers by way of a Steel Consumers’ Council exists, which is conducted on regular basis.
· Interface helps in redressing availability problems, complaints related to quality.
Steel Prices
· Price regulation of iron & steel was abolished on 16.1.1992. Since then steel prices are determined by the interplay of market forces.
· Domestic steel prices are influenced by trends in raw material prices, demand – supply conditions in the market, international price trends among others.
· An Inter-Ministerial Group (IMG) is functioning in the Ministry of Steel, under the Chairmanship of Secretary (Steel) to monitor and coordinate major steel investments in the country.
· The Government also took various fiscal and other measures for stabilizing steel prices like significant reduction in import duties o n steel, major raw materials, including mineral products and ores and concentrates in last few years. Also, excise duty for steel is currently at 12 %. The government has also imposed export duty of 30 % on iron ore fines and lumps in order to control ad-hoc exports of the mineral and conserve it for long term requirement of the domestic steel industry.
· For ensuring quality of steel several items have been brought under a quality control order issued by the Government. The matter to bring more steel items under this order is under examination.
Imports..!
· Iron & steel are freely importable as per the extant policy.
· Last five year’s import of total finished steel (alloy + non alloy) is given below:-
| Indian steel industry : Imports (in million tonnes) | |||||||
| Category | 2007-08 | 2008-09 | 2009-10 | 2010-11 | 2011-12* | ||
| Total Finished Steel (alloy + non alloy) | 7.03 | 5.84 | 7.38 | 6.66 | 6.83 | ||
| Source: Joint Plant Committee; *provisional | |||||||
Exports..!
· Iron & steel are freely exportable.
· Advance Licensing Scheme allows duty free import of raw materials for exports. Duty Entitlement Pass Book Scheme (DEPB) was introduced to facilitate exports. Under this scheme exporters on the basis of notified entitlement rates, are granted due credits which would entitle them to import duty free goods. The DEPB benefit on export of various categories of steel items scheme is currently applicable for steel exports.
· Last five year’s export of total finished steel (alloy + non alloy) is given below:-
· Last five year's production for sale of pig iron, sponge iron and total finished steel (alloy + non-alloy) are given below:
| Indian steel industry : Exports (in million tonnes) | |||||||
| Category | 2007-08 | 2008-09 | 2009-10 | 2010-11 | 2011-12* | ||
| Total Finished Steel (alloy + non alloy) | 5.08 | 4.44 | 3.25 | 3.64 | 4.04 | ||
| Source: Joint Plant Committee; *provisional | |||||||
Levies on Iron & Steel
SDF levy
· This was a levy started for funding modernisation, expansion and development of steel sector. The Fund, inter-alia, supports :
1. Capital expenditure for modernisation, rehabilitation, diversification, renewal & replacement of Integrated Steel Plants.
2. Research & Development
3. Rebates to SSI Corporations
4. Expenditure on ERU of JPC
· The SDF levy was abolished on 21.4.94
· Cabinet decided that corpus could be recycled for loans to Main Producers
· Interest on loans to Main Producers is set aside for promotion of R&D on steel etc.
· An Empowered Committee has been set up to guide the R&D effort in this sector.
EGEAF – Was a levy started for reimbursing the price differential cost of inputs used for engineering exporters. Fund was discontinued on 19.2.96.
Opportunities for growth of Iron and Steel in Private Sector
The New Industrial Policy Regime
The New Industrial policy opened up the Indian iron and steel industry for private investment by (a) removing it from the list of industries reserved for public sector and (b) exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are now freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of a facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario.
The Growth Profile..!
(i) Steel
The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized/expanded, a large number of new steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies. In the last few years, the rapid and stable growth of the demand side has also prompted domestic entrepreneurs to set up fresh greenfield projects in different states of the country.
Crude steel capacity was 89 mt in 2011-12 (prov) and India, the 4 th largest producer of crude steel in the world, has to its credit, the capability to produce a variety of grades and that too, of international quality standards. The country is expected to become the 2 nd largest producer of crude steel in the world by 2015-16, provided all requirements for creation of fresh capacity are adequately met.
(ii) Pig Iron
India is also an important producer of pig iron. Post-liberalization, with setting up several units in the private sector, not only imports have drastically reduced but also India has turned out to be a net exporter of pig iron. The private sector accounted for 91% of total production for sale of pig iron in the country in 2011-12 (provisional). The production of pig iron has increased from 1.6 mt in 1991-92 to 5.78 mt in 2011-12 (provisional).
(iii) Sponge Iron
India is the world’s largest producer of sponge iron with a host of coal based units, located in the mineral-rich states of the country. Over the years, the coal based route has emerged as a key contributor and accounted for 76% of total sponge iron production in the country (20.37 mt in 2011-12; prov.). Capacity in sponge iron making too has increased over the years and stands at around 35 mt.
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