Steel finds its usage in a myriad of things. It is employed in the construction industry, automobile sector, appliances, medical equipment, in the utensils that we eat, everyday products like the cans that we drink in and even in the smallest of products like needles. And yet, it is far away from reaching its saturation point. The steel production is the key for India to attain a higher GDP because of its wide usage and India’s capacity to cater to the steel requirements.
India produces more than 100 MT of steel each year and has surpassed Japan to become the second-largest producer of crude steel. The steel industry already contributes around 2% to India’s GDP and with the growing need for steel, it has the potential to add more to the country’s growth. The steel sector employees over 6 lakh people directly and around 20 lakh people indirectly, thus being of great importance in the development of the country.
The steel industry of India has an output multiplier effect (the multiplier effect causes gains in total output to be greater than the change in spending that caused it) of 1.4x, while it has an employment multiplier effect (measures the amount of direct, indirect and induced jobs created (or lost) in the area) of 6.8x. Hence, the steel industry is further expected to grow. Moreover, the per capita steel consumption in India is 69 kg, whereas, globally it is 208 kg. The figure in India is really low and by 2030, the steel consumption per person is expected to reach 160 kg per person, thus making way for more opportunities in the steel industry.
There are several factors which further aids in expanding the steel industry. The Indian steel sector owes its growth to the domestic availability of raw materials such as high-grade iron ore and non-coking coal. Moreover, the cost-effective and young workforce is another advantage to India’s steel industry. Also, India is blessed with a long coastline on the west, east, and south; thus making it one of the chief players in the global steel market.
In the coming years, the requirement of steel in India is expected to grow enormously as India is soon likely to become the second-largest consumer of steel. There are numerous other opportunities that will facilitate the same such as the announcement of the expansion of railways, the construction of around 20,000 km of highways and the establishment of numerous steel plants under the Sagarmala project. Moreover, the proposed National Logistics Policy further works in favour of the steel industry as it would result in a smooth movement of goods throughout the nation and reduction of the transaction cost.
The steel industry will also reap benefits from the Budget 2020 as the government has introduced infra projects worth Rs 103 trillion besides the supply of Rs 1.70 trillion for transport infrastructure and highways construction. The steel industry will further strengthen as India is negotiating Free Trade Agreements (FTAs) with a number of countries and the same will be of huge profit to the domestic manufacturing industry.
All these factors come together to provide a boost to the steel industry, which in turn yields numerous job opportunities and enhances the GDP of the country.