Govt Sets Target of  500 Million Tonnes Steel Production by 2034

Syllabus: GS3/ Economy

Context

• The Union Minister of Commerce and Industry, during his address at the 5th edition of ISA Steel Conclave set a target of 500 mn tonnes of steel production by 2034.

Status of Steel Production in India

• India is the world’s second-largest producer of crude steel, surpassing Japan in 2018.
• In FY24, the production of crude steel and finished steel stood at 143.6 MT and 138.5 MT, respectively.
• India’s finished steel consumption stood at 119.17 MT in FY23 and 138.5 MT in FY24.​
• In FY24, the exports and imports of finished steel stood at 7.49 MT and 8.32 MT, respectively.
• The per-capita consumption of steel stood at 86.7 kgs in FY23.

Potential of Steel Sector in India

• Easy availability of low-cost manpower and presence of abundant iron ore reserves make India competitive in the global set up.​
  • India is home to fifth-highest reserves of iron ore in the world.​
• India surpassed China as the top developer of coal-based steel capacity in July 2023, according to the latest report from Global Energy Monitor (GEM).
• Automobile Industry Growth: The automotive sector is a major consumer of steel.
  • As India’s middle class expands and consumer purchasing power increases, there is a growing demand for automobiles, contributing to the demand for steel.
• Urbanization: With a growing population and increasing urbanization, there is a rising demand for housing, commercial spaces, and urban infrastructure. This trend contributes to a sustained demand for steel in construction and real estate sectors.

Concerns for Steel Sector in India

• Raw Material Availability and Cost: The steel industry heavily depends on the availability and cost of raw materials such as iron ore and coking coal.
  • India remains dependent on imports to meet 90% of its coking coal requirement. 
• Global Competition: The steel industry is highly competitive and Indian steel manufacturers face stiff competition from international players.
  • Dumping of steel products especially from China and Vietnam in the past had major impacts on the industry.
• Infrastructure Bottlenecks: Inadequate transportation facilities, inefficient logistics, and power shortages, hinder the smooth operation of the steel industry. It also leads to increased production costs.

Steps taken by Government

• National Steel Policy 2017 (NSP 2017): India has set the targets of achieving the total crude steel capacity of 300 MTPA (million tonnes per annum) and total crude steel demand/production of 255 MTPA by 2030-31. 
• In 2019, the Government introduced Steel Scrap Recycling Policy with an aim to reduce imports.
• Policy for providing preference to Domestically Manufactured Iron and Steel Products (DMI & SP Policy) in government procurement which has resulted in import substitution of ₹34,800 Crore approximately.
• Brand India labeling: the Ministry of Steel has undertaken the initiative of Made in India branding of Steel produced in the country to differentiate Indian quality steel from the others.
• In 2021, India and Russia signed an MoU to carry out R&D in the steel sector and produce coking coal (used in steel making).
• In 2021, took initiative to boost the steel sector through joint activities under the framework of India–Japan Steel Dialogue.
• Productivity Linked Incentive Scheme (PLI) for steel: The Scheme was approved by the Government in 2021, with a financial outlay of ₹ 6,322 crores.
  • Objective: To promote domestic manufacturing of ‘Specialty Steel’ within the country by attracting capital investment, generate employment and promote technology up-gradation in the steel sector.
• The “Promotion of Research & Development in Iron & Steel Sector” scheme provides financial support to stakeholders for initiatives aimed at promoting environmental sustainability and reducing carbon emissions.
• Government allowed 100% Foreign Direct Investment (FDI) in the steel sector under the automatic route.
  • According to the data released by the Department for Promotion of Industry and Internal Trade (DPIIT), between April 2000-March 2024, Indian metallurgical industries attracted FDI inflows of US$ 17.51 billion.

Way Ahead

• There is a need for innovation in achieving low emissions, high productivity, and superior quality to position India as a leading global steel manufacturer.
• The use of artificial intelligence (AI) is required to optimize production, minimize waste, and enhance efficiency throughout the value chain. 
• Also there is a need for a level playing field for domestic industries and addressing the Carbon Border Adjustment Mechanism (CBAM) with steel industry leaders to promote sustainable manufacturing.

Source: TH