Keep an Eye on India’s Steel Manufacturing Industry

Steel is the world’s most heavily traded commodity by value after oil.

The demand for machinery, metals and steel products is on the rise, and steel industry experts are gearing for increased global competition. However, the current international market is boding well for India’s steel industry. 

International trade experts predict India will emerge as the second largest steel manufacturer in the world by 2016, right behind China. Currently, India is the fourth steel manufacturer is the world, behind China, the EU, Japan and the United States.

The resurgence of India’s steel industry is nothing new. The total steel production of India was 35 mtpa 10 years ago and has increased dramatically to approximately 89 mtpa today. By the middle of the next decade, India hopes to achieve a capacity of 300 mtpa. Likewise, the depreciation in the value of the rupee has aided Indian steel manufacturers, because they are exporting more than they produce.  Infrastructure projects, such as the Golden Quadrilateral and Dedicated Freight Corridor, will boost the demand in the steel sector as well.

The Golden Quadrilateral (GQ) is a highway network connecting the major industrial centers in India that include Delhi, Mumbai, Kolkata and Chennai. Other cities connected by the network are Pune, Ahmedabad, Jaipur, Kanpur, Surat, Bengaluru, Visakhapatnam and Bhubaneswar. The GQ is the largest highway project in India and the first longest in the world. The projected benefits of the GQ include:

  • Driving economic growth by creating construction jobs as well as indirect demand for materials such as cement
    and steel
  • Creating faster transport networks between major cities and ports
  • Providing smoother transport of products and people
  • Developing industrial and job development in smaller towns through the network
  • Expanding farmers’ opportunities to transport produce more efficiently with fewer wastage and spoils
  • Boosting truck transport

The Dedicated Freight Corridor is run by the Government of India to maintain and operate the various corridors. For example, the Eastern Dedicated Freight Corridor is a proposed double line, freight corridor. Essar, Gammon, Prosco and China Railway Bureau Group were among the first international companies to pass the pre-qualification bid process for the civil structural and track work contract for the Bhaupur-Mughalsarai section of the Eastern Dedicated Freight Corridor. Additional planned corridors include the North-South Dedication Freight Corridor connecting Delhi and Chennai, the East-West Dedicated Corridor connecting Kolkata and Mumbai, and the South-West Dedicated Freight Corridor connecting Chennai and Goa.

Additionally, India’s government will soon ask the country’s major steelmakers to invest at least 1 percent of their total revenue toward research and development activities in the next two years. The move is a direct result to continue boosting India’s steel industry and last year,  Prime Minister Manmohan Singh pushed manufacturing growth and advancement of materials, alloys and composites. Steel Minister Beni Prasad Verma stated, “The roadmap also aims at tackling limiting factors like technological obsolescence and lack of timely modernization, lack of inferior quality raw material and lack of automation.”

Price volatility of materials is a major challenge for manufacturers, with many forecasting price increases in steel. Download our exclusive eBook, Evaluating Key Trends in Global Logistics, to learn how manufacturers are recognizing price volatility, and other challenges, and developing strategies to stay competitive in the manufacturing industry.

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