Steel Sector in India: Latest Developments

2019 ias preliminary exam test series

Steel is a strategic sector for any major developing and developed economy. India is the 3rd largest Steel producer globally and is likely to be the 2nd largest Steel producer in a few years.

The steel sector contributes about 2% to the country’s GDP.

Over the last few years, the Steel sector has been adversely impacted by the global steel glut which resulted in predatory pricing and a surge in steel imports into the country. However, on account of timely intervention by the Government and industry through various trade related measures like anti-dumping and safeguards as well as other policy initiatives, the impact of the global glut were significantly mitigated.

The Government has been proactive in ensuring adequate raw material availability at reasonable prices and explored ways of reducing input, logistic and infrastructure cost of Steel production. The Government is also working on ways to reduce the financial stress in the Steel sector by reducing imports, increasing exports as well as examining strategies of increasing steel demand.

As a result of various steps taken, Steel imports have declined by 38.28% between April-November, 2016 while exports have increased by 59.96% during the same period. Overall Steel production also grew by 8.8% between April-November, 2016 compared to the same period last year.

Steel sector trends

India is currently the world’s 3rd largest producer of crude steel against its 8th position in 2003 and is expected to become the 2nd largest producer of crude steel in the world soon.

India is currently also the world’s largest producer of direct reduced iron (DRI) or sponge iron, a status it has maintained every year since 2003.

The country was also the 3rd largest consumer of finished steel in the world in 2015 (preceded by China and the USA) and is expected to maintain the said status for 2016 also.

The domestic steel sector contributes around 2% of the country’s GDP and employs over 6 lakh people.

Production, consumption and demand of steel

The per capita consumption of total finished steel in the country has risen from 58 kg in 2011-12 to 63 kg in 2015-16.

Crude steel capacity in the country stood at 121.97 million ones in 2015-16 while production of crude steel stood at 89.79 mt during the same year.

India has been a net importer of total finished steel every year since 2007-08 with the exception of 2013-14.

MAJOR INITIATIVES AND ACHIEVEMENTS

The Steel and Steel Products (Quality Control) Order, 2015 issued on 18th December, 2015 had 15 steel (flat and long) products under the mandatory certification marks scheme of BIS. This order was amended to facilitate the domestic and international steel industry to align their products processes in line with the requirements of steel quality control order and also to obtain licenses from BIS to enable them to supply the certified steel products with Standard Marks of BIS.

The first amendment order was accordingly issued on 17th March, 2016 to allow six months additional time in respect of 7 out of 15 products covered in the original order simultaneously enforcing the order on remaining 8 products w.e.f. March 2016. The second amendment order was issued on 16th September,2016 to allow further 3 months’ time i.e. upto 18th December,2016 for implementation of the order in respect of the remaining 7 products.

To provide level playing field to the domestic steel producers, Government has extended Minimum Import Price (MIP) on 19 steel products till 4th February 2017.

Safeguard duty on HR coils of 20% notified in September 2015 provisionally and final notification issued for the same in March 2016 extending 20% Safeguard duty upto September,2016. Thereafter phased reduction to 18% (till March,2017), 15% (till September,2017) and 10% by March,2018.

Provisional Anti-Dumping duty notified on import of flat products (Hot Rolled & Cold Rolled) and on Wire Rods from China, Japan, Korea, Russia, Brazil, Indonesia & Ukraine.

Steel Authority of India Ltd has undertaken Modernisation & Expansion of its integrated steel plants at Bhilai, Bokaro, Rourkela, Durgapur & Burnpur and special steel plant at Salem. The crude steel capacity is being enhanced from 12.8 Million tonne to 21.4 million tonne per annum. The indicative investment is about ₹62,000 crore. Additionally, approximately ₹10,000 crore has been earmarked for Modernisation and Expansion of SAIL Mines. The Facilities under Modernisation and Expansion of Salem, Rourkela, IISCO, Bokaro and Durgapur Steel Plants have been completed.

At Bhilai Steel Plant, some of the facilities such as New Coke Oven Battery No.11, 2nd Sinter Machine in Sinter Plant-3, Ore Handling Plant Part-A, Universal Rail Mill along with Rail Welding Lines and Oxygen Plant on BOO basis have been completed. The balance facilities are under various stages of execution and efforts are being made to complete the balance facilities progressively by 2016-17.

Ultra Mega Steel Project: With the aim to develop large capacity mega steel projects in the country, which would help India in achieving the capacity growth of 300 million ones of crude steel by 2025-26, Ministry of Steel has evolved a concept of developing Ultra Mega Steel Plants. SAIL is participating for setting up of an Ultra Mega Steel Plant of capacity (3+3) or (4+2) MTPA (million ones per annum) in Bastar, Chhattisgarh. An MoU to this effect was signed between SAIL, NMDC, MoS & GoCG in May 2015 at Dantewada in the presence of Hon’ble Prime Minister. Definitive Agreements among the parties have been signed and identification of land is in progress. Process for Incorporation of the Steel SPV for Chhattisgarh has been completed.

Development of Rowghat – Jagdalpur Rail Corridor in the State of Chhattisgarh: With the aim of bringing about greater socio-economic development of the backward areas of Bastar region in Chhattisgarh and to further the industrial progress and mining activities of the region, an MOU was signed amongst SAIL, NMDC, IRCON and GoCG in May 2015 for development of a rail corridor from Rowghat to Jagdalpur. This rail corridor shall be used for both freight and passenger services in the Southern part of Chhattisgarh. A new Joint Venture Company under the name “Bastar Railway Private Limited” has been incorporated in May’2016, for implementation of the project. The survey work & feasibility study for Railway line is being undertaken by IRCON.

SAIL RITES Bengal Wagon Industry Pvt. Ltd. (SRBWIPL): SRBWIPL, a JV of SAIL and RITES, for manufacture and supply of 1200 wagons and rehabilitation of 300 wagons per annum to Railways has started commercial operations at Kulti, West Bengal. Assured Offtake Agreements (AOTAs), one for manufacture of new wagons and another for Rehabilitation of in-service wagons have been signed between Railways and the JV Company and orders have been placed on the JVC by Railways.

Current Affairs for IAS Exam