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Steel production to hit 128.6 million tonnes by 2021: Survey

Jul 8,2019

The government has estimated the country's steel output to hit 128.6 million tonnes by 2021 and consumption of the same to reach 140 million tonnes by 2023, on the back of investments in infrastructure, construction and automobile sectors, according to the Economic Survey 2018-19.


Crude steel production in 2018-19 stood at 106.56 million tonnes, a growth 3.3 percent over 103.13 million tonnes in 2017-18, said the Survey, tabled by Finance Minister Nirmala Sitharaman in Parliament on Thursday.


Currently, compared with the global average of 214 kg India's per-capita consumption stands at only 69 kg. It is estimated that steel production in India will reach 128.6 million tonnes by 2021 and its consumption will increase to 140 million tonnes by 2023.


With huge investments in infrastructure, construction and automobile sector, steel demand and corresponding consumption is growing at an average of 7.4 percent. This will lead to steel production to go up to 255 million tonnes by 2030 and per capita steel consumption to 160 kg.


Under the National Steel Policy 2017, the government aims to ramp up steel-making capacity to 300 million tonnes, while production at 255 million tonnes and consumption to 160 kg by 2030. The Survey said the policy gives broad policy directives to the industry for encouraging long-term growth for Indian steel on both supply and demand fronts.


It said the policy envisages focus on domestic production especially of value-added steel in order to meet the growing demand while adding there is a need for investment in capacity addition and infusion of modern technology for production.


It is estimated that 1.4 tonnes of iron ore, 0.6-0.7 tonne of coking coal and around 0.2-0.3 tonne of fluxes can be saved from recycling of one tonne of steel scrap and thus indirectly will reduce the production which saves around 16-17 percent of energy, the domestic steel sector faced a number of issues in 2018-19, such as dependence on imported coking coal and import of high-grade steel, it said.


"Some of the key challenges faced by the Indian steel industry are capacity expansion as the demand for steel is bound to rise with economic growth. High grade and value-added steel are used in power, defense and automobile which is currently imported.


"Difficulties in acquiring mining lease and high dependency on import of coking coal add to the cost of steel production. High logistics costs also act as a major constraint," it said.


The Survey said 2018-19 in the global scenario witnessed the weakening of steel market fundamentals, an increase in trade friction with the imposition of protectionist measures by the US and China, among other issues.


Pursuant to the imposition of trade restrictive measures by the US, the European Union, and Canada, India's exports have declined. The total exports, with the highest volume of 9.62 million tonnes in 2017-18, fell to 6.36 million tonnes during 2018-19. On the other hand, imports have gone up particularly from South Korea, Japan, and ASEAN countries. India remained an importer of finished steel at 7.84 million tonnes during 2018-19 as against 7.48 million tonnes during 2017-18.


According to estimates, the steel sector directly contributes 1.4-2 percent to India's GDP and its weight age in the official Index of Industrial Production is 7.22 percent and accounts for 7.53 percent of the Wholesale Price Index.


India is the second-largest producer of crude steel in the world after China and third-largest consumer of the finished steel after China and the US.