Central Idea

The Indian government is focusing on the steel sector with the Production Linked Incentive (PLI) scheme 2.0 and ensuring raw material supply in 2024.
Minister of State for Steel highlighted these initiatives, emphasizing the promotion of scrap usage in steel production.

Growth and Recovery Post-Pandemic

Resilience: The steel sector has shown a strong recovery following the impact of the COVID-19 pandemic in 2020-21.
Production and Consumption: From April to November 2023, crude steel production increased by 14.5% y-o-y to 94.01 Million Tonnes (MT), and finished steel consumption rose by 14% to 86.97 MT.

Capacity Goal: India aims to reach an installed steel manufacturing capacity of 300 MT by 2030, currently at around 161 MT.
Innovation: Efforts are underway to integrate artificial intelligence and new technologies to enhance steel output and reduce carbon emissions.

PLI Scheme 1.0: The first phase aimed to boost speciality steel production, creating an additional capacity of around 25 MT.
Capacity Increase: Steel players are expanding their capacities, with the government facilitating project clearances and easing business operations.

Rising Imports and Costs: The industry faces challenges with increasing imports, high raw material prices, and geopolitical uncertainties.
Dependency: India relies heavily on imports for coking coal, a critical raw material for steel production.

India’s Growth: India, the world’s second-largest steel producer, has shown robust growth, significantly contributing to the global steel industry.
Comparison with China: While China remains the largest producer, India has outpaced China in terms of growth rate in recent years.

Sectoral Demand: The construction sector, driven by government infrastructure spending and private investment, leads the demand for steel in India.
Import Measures: The government has implemented anti-dumping duties and other barriers to address steel dumping, particularly from China and Vietnam.

Domestic Prices: Indian steel prices have increased due to strong demand, but global uncertainties may impact future price hikes.
Global Market Influence: Domestic pricing trends may be influenced by global economic recovery and price movements in the US and Europe.

Strategic Focus: The Indian government’s initiatives, like the PLI scheme, aim to strengthen the steel sector’s global competitiveness and self-reliance.
Balancing Growth and Challenges: While the sector shows promising growth, addressing challenges like raw material dependency and import pressures remains crucial.
Global Positioning: India’s significant role in the global steel market underscores its potential to influence industry trends and drive economic growth.