AN OVERVIEW OF STEEL SECTOR IN India
Global Scenario
In 2016, the world crude steel production reached 1630 million tonnes (mt) and showed a
growth of 0.6% over 2015.
China remained world’s largest crude steel producer in 2016 (808 mt) followed by Japan
(105 mt), India (96 mt) and the USA (79 mt).
World Steel Association has projected Indian steel demand to grow by 6.1% in 2017 and
by 7.1% in 2018 while globally, steel demand has been projected to grow by 1.3% in
2017 and by 0.9% in 2018. Chinese steel use is projected to show nil growth in 2017 and
decline by 2% in 2018.
Per capita finished steel consumption in 2016 is placed at 208 kg for world and 493 kg for
China by World Steel Association.
Domestic Scenario
The Indian steel industry has entered into a new development stage, post de-regulation,
riding high on the resurgent economy and rising demand for steel.
Rapid rise in production has resulted in India becoming the 3rd largest producer of crude
steel in 2015 as well as in 2016. The country was the largest producer of sponge iron or
DRI in the world during the period 2003-2015 and emerged as the 2nd largest global
producer of DRI in 2016 (after Iran). India is also the 3rd largest finished steel consumer
in the world and maintained this status in 2016. Such rankings are based on provisional
data released by the World Steel Association for the above year.
In a de-regulated, liberalized economic/market scenario like India the Government’s role
is that of a facilitator which lays down the policy guidelines and establishes the
institutional mechanism/structure for creating conducive environment for improving
efficiency and performance of the steel sector.
In this role, the Government has released the National Steel Policy 2017, which has laid
down the broad roadmap for encouraging long term growth for the Indian steel industry,
both on demand and supply sides, by 2030-31.
The said Policy is an updated version of National Steel Policy 2005 which was released
earlier and provided a long-term growth perspective for the domestic iron and steel
industry by 2019-20.
The Government has also announced a policy for providing preference to domestically
manufactured Iron & Steel products in Government procurement. This policy seeks to
accomplish PM’s vision of ‘Make in India’ with objective of nation building and
encourage domestic manufacturing and is applicable on all government tenders where
price bid is yet to be opened. Further, the Policy provides a minimum value addition of
15% in notified steel products which are covered under preferential procurement. In order
to provide flexibility, Ministry of Steel may review specified steel products and the
minimum value addition criterion.
Production
Steel industry was de-licensed and de-controlled in 1991 & 1992 respectively.
India is currently the 3rd largest producer of crude steel in the world.
In 2016-17 (prov.), production for sale of total finished steel (alloy + non alloy) was
100.74 mt, a growth of 10.7% over 2015-16.
Production for sale of Pig Iron in 2016-17 (prov.) was 9.39 mt, a growth of 1.8% over
2015-16.
India was the largest producer of sponge iron in the world during the period 2003-2015
and was the 2nd largest producer in 2016 (after Iran) . The coal based route accounted for
79% of total sponge iron production in the country in 2016-17 (prov).
Demand - Availability
Industry dynamics including demand – availability of iron and steel in the country are
largely determined by market forces and gaps in demand-availability are met mostly
through imports.
Interface with consumers exists by way of meeting of the Steel Consumers’ Council,
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.
As a facilitator, the Government monitors the steel market conditions and adopts fiscal
and other policy measures based on its assessment. Currently, GST of 18% is applicable
on steel and there is no export duty on steel items. The government has also imposed export duty of 30% on all forms of iron ore except low grade (below Fe 58%) iron ore
lump & fines and iron ore pellets both of which have nil export duty.
In view of rising imports, the Government had earlier raised import duty on most steel
items twice, each time by 2.5% and imposed a gamut of measures including anti-dumping
and safeguard duties on a host of applicable iron and steel items. In a further move to curb
steel imports, the Indian government banned the production and sale of steel products that
does not meet Bureau of Indian Standard (BIS) approval and to check the sale of
defective and sub-standard stainless steel products used for making utensils and various
kitchen appliances, it issued the Stainless Steel (Quality Control) Order, 2016 for
products used in making utensils and kitchen appliances, that will help filter imports of
the metal. Again, in February 2016, the Indian Government had imposed the Minimum
Import Price (MIP) condition on 173 steel products. The MIP was extended thrice and
ceased to be effective in February 2017. Currently, a mix of anti-dumping /safeguard and
other measures are in place on a range of steel items to control the inflow of cheap steel.
Further, a Steel Price Monitoring Committee has been constituted by the Government
with the aim to monitor price rationalization, analyze price fluctuations and advise all
concerned regarding any irrational price behaviour of steel commodity.
Imports
Iron & steel are freely importable as per the extant policy.
Data on import of total finished steel (alloy/stainless + non alloy) is given below for last
five years and April-May 2017:
Indian steel industry : Imports (in million tonnes)
Category 2012-
13
2013-
14
2014-
15
2015-
16
2016-
17*
April-May
2017*
Total Finished Steel
(alloy/stainless + non alloy)
7.93 5.45 9.32 11.71 7.23 1.06
Source: Joint Plant Committee; *prov.
Exports
Iron & steel are freely exportable.
India emerged as a net exporter of total finished steel in 2016-17 (prov.)
Data on export of total finished steel (alloy/stainless + non alloy) is given below for
last five years and April-May 2017:
Indian steel industry : Exports (in million tonnes)
Category 2012-13 2013-
14
2014-
15
2015-
16
2016-
17*
AprilMay
2017*
Total Finished Steel (alloy/stainless
+ non alloy)
5.37 5.99 5.59 4.08 8.24 1.38
Source: Joint Plant Committee; *prov
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 126.33 mt in 2016-17 (prov.), up by 3.6% over 2015-16 and India,
which emerged as the 3rd largest producer of crude steel in the world in 2016 as per
provisional ranking released by the World Steel Association, 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 2nd largest producer of crude steel in the world soon.
(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 92% of total
production for sale of pig iron in the country in 2016-17 (prov.). The production for sale of
pig iron has increased from 1.6 mt in 1991-92 to 9.39 mt in 2016-17 (prov.).
(iii) Sponge Iron: India, world’s 2nd largest producer of sponge iron (2016, prov.), has 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 79% of total sponge iron
production in the country. Capacity in sponge iron making too has increased over the years
and stood at around 43 mt (2015-16).
In 2016, the world crude steel production reached 1630 million tonnes (mt) and showed a
growth of 0.6% over 2015.
China remained world’s largest crude steel producer in 2016 (808 mt) followed by Japan
(105 mt), India (96 mt) and the USA (79 mt).
World Steel Association has projected Indian steel demand to grow by 6.1% in 2017 and
by 7.1% in 2018 while globally, steel demand has been projected to grow by 1.3% in
2017 and by 0.9% in 2018. Chinese steel use is projected to show nil growth in 2017 and
decline by 2% in 2018.
Per capita finished steel consumption in 2016 is placed at 208 kg for world and 493 kg for
China by World Steel Association.
Domestic Scenario
The Indian steel industry has entered into a new development stage, post de-regulation,
riding high on the resurgent economy and rising demand for steel.
Rapid rise in production has resulted in India becoming the 3rd largest producer of crude
steel in 2015 as well as in 2016. The country was the largest producer of sponge iron or
DRI in the world during the period 2003-2015 and emerged as the 2nd largest global
producer of DRI in 2016 (after Iran). India is also the 3rd largest finished steel consumer
in the world and maintained this status in 2016. Such rankings are based on provisional
data released by the World Steel Association for the above year.
In a de-regulated, liberalized economic/market scenario like India the Government’s role
is that of a facilitator which lays down the policy guidelines and establishes the
institutional mechanism/structure for creating conducive environment for improving
efficiency and performance of the steel sector.
In this role, the Government has released the National Steel Policy 2017, which has laid
down the broad roadmap for encouraging long term growth for the Indian steel industry,
both on demand and supply sides, by 2030-31.
The said Policy is an updated version of National Steel Policy 2005 which was released
earlier and provided a long-term growth perspective for the domestic iron and steel
industry by 2019-20.
The Government has also announced a policy for providing preference to domestically
manufactured Iron & Steel products in Government procurement. This policy seeks to
accomplish PM’s vision of ‘Make in India’ with objective of nation building and
encourage domestic manufacturing and is applicable on all government tenders where
price bid is yet to be opened. Further, the Policy provides a minimum value addition of
15% in notified steel products which are covered under preferential procurement. In order
to provide flexibility, Ministry of Steel may review specified steel products and the
minimum value addition criterion.
Production
Steel industry was de-licensed and de-controlled in 1991 & 1992 respectively.
India is currently the 3rd largest producer of crude steel in the world.
In 2016-17 (prov.), production for sale of total finished steel (alloy + non alloy) was
100.74 mt, a growth of 10.7% over 2015-16.
Production for sale of Pig Iron in 2016-17 (prov.) was 9.39 mt, a growth of 1.8% over
2015-16.
India was the largest producer of sponge iron in the world during the period 2003-2015
and was the 2nd largest producer in 2016 (after Iran) . The coal based route accounted for
79% of total sponge iron production in the country in 2016-17 (prov).
Demand - Availability
Industry dynamics including demand – availability of iron and steel in the country are
largely determined by market forces and gaps in demand-availability are met mostly
through imports.
Interface with consumers exists by way of meeting of the Steel Consumers’ Council,
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.
As a facilitator, the Government monitors the steel market conditions and adopts fiscal
and other policy measures based on its assessment. Currently, GST of 18% is applicable
on steel and there is no export duty on steel items. The government has also imposed export duty of 30% on all forms of iron ore except low grade (below Fe 58%) iron ore
lump & fines and iron ore pellets both of which have nil export duty.
In view of rising imports, the Government had earlier raised import duty on most steel
items twice, each time by 2.5% and imposed a gamut of measures including anti-dumping
and safeguard duties on a host of applicable iron and steel items. In a further move to curb
steel imports, the Indian government banned the production and sale of steel products that
does not meet Bureau of Indian Standard (BIS) approval and to check the sale of
defective and sub-standard stainless steel products used for making utensils and various
kitchen appliances, it issued the Stainless Steel (Quality Control) Order, 2016 for
products used in making utensils and kitchen appliances, that will help filter imports of
the metal. Again, in February 2016, the Indian Government had imposed the Minimum
Import Price (MIP) condition on 173 steel products. The MIP was extended thrice and
ceased to be effective in February 2017. Currently, a mix of anti-dumping /safeguard and
other measures are in place on a range of steel items to control the inflow of cheap steel.
Further, a Steel Price Monitoring Committee has been constituted by the Government
with the aim to monitor price rationalization, analyze price fluctuations and advise all
concerned regarding any irrational price behaviour of steel commodity.
Imports
Iron & steel are freely importable as per the extant policy.
Data on import of total finished steel (alloy/stainless + non alloy) is given below for last
five years and April-May 2017:
Indian steel industry : Imports (in million tonnes)
Category 2012-
13
2013-
14
2014-
15
2015-
16
2016-
17*
April-May
2017*
Total Finished Steel
(alloy/stainless + non alloy)
7.93 5.45 9.32 11.71 7.23 1.06
Source: Joint Plant Committee; *prov.
Exports
Iron & steel are freely exportable.
India emerged as a net exporter of total finished steel in 2016-17 (prov.)
Data on export of total finished steel (alloy/stainless + non alloy) is given below for
last five years and April-May 2017:
Indian steel industry : Exports (in million tonnes)
Category 2012-13 2013-
14
2014-
15
2015-
16
2016-
17*
AprilMay
2017*
Total Finished Steel (alloy/stainless
+ non alloy)
5.37 5.99 5.59 4.08 8.24 1.38
Source: Joint Plant Committee; *prov
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 126.33 mt in 2016-17 (prov.), up by 3.6% over 2015-16 and India,
which emerged as the 3rd largest producer of crude steel in the world in 2016 as per
provisional ranking released by the World Steel Association, 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 2nd largest producer of crude steel in the world soon.
(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 92% of total
production for sale of pig iron in the country in 2016-17 (prov.). The production for sale of
pig iron has increased from 1.6 mt in 1991-92 to 9.39 mt in 2016-17 (prov.).
(iii) Sponge Iron: India, world’s 2nd largest producer of sponge iron (2016, prov.), has 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 79% of total sponge iron
production in the country. Capacity in sponge iron making too has increased over the years
and stood at around 43 mt (2015-16).
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