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Maximum demand to come from the construction sector, says Dr Bhaskar Chatterjee, Secretary-General, Indian Steel Association

Maximum demand to come from the construction sector, says Dr Bhaskar Chatterjee, Secretary-General, Indian Steel Association

Production and consumption of steel are widely regarded as an indicator of economic progress. Your views on this
Steel has been one of the core drivers of industrialization and has historically held a dominant position. As a raw material and intermediate product for downstream industry production and consumption of steel are widely regarded as indicators of economic progress. Thus, it would not be an overstatement to say that the steel industry has always been at the forefront of industrial development and forms the backbone of any economy.  Today, the steel industry contributes slightly more than 2% to the GDP of India. This percentage accounts for direct contribution. The indirect contribution of steel is much larger, owing to the dependence of other sectors. The steel industry employs nearly half a million people directly and two million people indirectly. The output effect of steel on Indian economy is approximately 1.4x with an employment multiplier of 6.8x. As per the World Steel Association, globally, for every two jobs created in the steel industry, 13 more jobs are created across the supply chain.

Covid-19 induced lockdown has battered almost all the industries, steel industry being one of them. What is the current status of the steel sector?
The domestic finished steel consumption in India has shown sign of recovery in the past few months and has come close to pre-Covid levels largely due to an increase in demand from certain sectors. The finished steel consumption in India increased from around 1 MT (Million Tonnes) from April, 2020 to 7.9 MT in September 2020. In line with the consumption, the crude steel production has also been improving, following a decline from 9 MT in 2019 to 3.1 MT in April 2020. Since then the production grew at a compounded monthly growth of 22 percent and reached to 8.6 MT in September 2020 and was down by just 2 percent Y-o-Y, supported by higher exports.

What is your assessment for the next financial year 2021-22? Where will the maximum demand for the industry come from?
As per estimates by the Indian Steel Association the steel demand from consuming sectors is estimated to contract by 17.6% in CY 2020 and to recover by 22.9% in CY 2021. Based on estimates, India’s Apparent Steel Use is estimated to be at 81.9 Mnt in 2020 and 100.4 Mnt in 2021. We expect maximum demand to come from the construction sector. Construction sector in India that includes physical infrastructure (excluding railways) and real estate, which contributes roughly 61% of India’s steel use or steel demand.

What is your take on the government’s amendment to the mining rules? How it is going to benefit / affect the steel industry?
At present mining contribution to the Gross Value Added (GVA) is much below its potential and vastly remained subdued, considering the abundance of mineral reserves in the country. Reasons attributed to this subdued growth are manifold – for example, operational uncertainties like the Supreme Court’s decision to ban mining in Goa and Karnataka, rising costs of production, delay in opening up of new mines, high taxes and duties, delay in attaining clearances and so on.
India is endowed with a plethora of minerals, both major and minor. Some of these raw materials like iron ore and coal are the lifeline of the industrial sectors - such as steel, cement, power, etc, that drive the Indian economy. In India, mining/ extraction of the minerals is guided by the national goals and is integrated into the overall strategy of the nation's economic development. Indian Steel Association would like to thank Ministry of Mines, Govt. of India for proposed reforms for Mining Sector in order to pick up growth trajectory and overcome dampening impact of Covid-19 pandemic which is also in line with the vision of Govt. of India "Atmanirbhar Bharat" for enhancing private investments in the Mining Sector by proposing few legislative changes in the MMDR Act to generate more revenue and employment. These reforms will also strengthen the mining sector, revive the mining infrastructure and supporting the needs of the industry in this vital hour. These reforms will go a long way in ensuring the raw material is available in adequate quantities at right price to the manufacturing sectors and also improve the competitiveness of the industry by rationalizing the various associated cost disadvantages.

The steel industry is going through a consolidation phase. How beneficial is this for the growth of the steel sector?
Consolidation of steel industry will pave the way for fulfilling the Nations vision of setting up installed capacity to 300 million tonnes by 2030-31 as enshrined in National Steel Policy 2017 from current capacity of 142 Million Tonnes.

Though India has huge export potential for steel, it still lags. Your comments
To increase exports of steel the government need to ensure level playing field for steel producers vis-à-vis other global players as already stated. For these to be realized, Indian steel industry needs to be globally competitive. Otherwise, India will never be able to increase steel exports beyond a certain limit and will continue to be threatened by cheaper imports. To prevent this, the government needs to ensure that the additional burden of USD 80–100 that Indian steel makers are saddled with is offset. Removal of non-creditable taxes, duties and cess is the easiest to achieve this. Otherwise, we foresee this to be a big challenge going forward. Apart from this the government need to ensure faster implementation of the Remission of Duties and Taxes on Exported Products (RoDTEP) which will replace the existing Merchandise Exports from India Scheme(MEIS) to encourage the exports of steel and other products.

How does the remedial ‘anti-dumping duty’ imposed by the government for cheap import of steel benefits / affects India steel sector in the long run?
India’s domestic steel industry is especially vulnerable to cheaper imports and demand fluctuation. The imposition of anti-dumping duty specifically on the imports of steel products from China, Indonesia, Ukraine, Vietnam, Japan and Korea will help domestic producers in the long run to achieve increase its market share in the domestic market and will also give an impetus to campaign ‘Vocal for Local’ a call given by Narendra Modi, Prime Minister of India.

The progress of the steel sector depends on government policies and projects. How can the government hand-hold the industry to propel the sector?
The government in these difficult times has taken numerous measures to help the industries to cope up with the Covid 19 Pandemic. “Atmanirbhar Bharat Abhiyan” is a perfect example of such measures. The government had also announced many infrastructure and construction projects which will help boost the steel consumption in the near future. However, in order to increase steel consumption, the government should promote use of steel in all sectors/projects, specifically in the construction sector. The government must lay more focus on the construction sector. The construction sector in India that includes physical infrastructure (excluding railways) and real estate, contributes roughly 61% of India’s steel use or steel demand. Use of Steel should be encouraged in projects keeping in to view life cycle cost of steel over other materials. Most of the steel industry experts believe that although the central and state government has announced many infrastructure projects but the execution of most of them has remained slow as equivalent liquidity has not been pumped in.

What is Indian Steel Association’s blueprint for transforming the Indian Steel Industry as a global leader acclaimed for its quality, productivity and competitiveness?
Indian Steel Association (ISA) is a member of World Steel Association.  ISA has also entered into an MoU with other Steel Industry association of various other Countries. ISA has engaged with steel associations of other countries for the issues of mutual interest, such as China Iron & Steel Association (CISA), Korea Iron and Steel Association (KOSA), Vietnam Steel Association (VSA) and The Japan Iron and Steel Federation (JISF). Periodic meetings and information sharing on various technology upgradations, environment and sustainability, other trade issues are deliberated and shared with our members, which is a step towards this direction.
One of the core goals for creation of ISA is to create a safer working environment for all stakeholders attached to working for the steel industry, especially our members. Reduction of carbon footprint is an objective towards which ISA is constantly deliberating with its members. Brain Storming with its members in the various Committees is a step toward this aspect. ISA is at the forefront of engaging with Director General of Bureau of Indian Standards as well as Ministry of Consumer Affairs, for mandatory certification of all steel products used in the country, irrespective of origin. The health and safety element of all consumer groups is of prime importance to ISA.

 

 

 




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