The 2020 Galwan valley misadventure by Jinping was the tipping point of India’s trust in China. From then on, our policymakers have taken due care in de hyphenating India and China. Now, the time has come when we should get over it. Sectors like steel need to independently evolve.
India is saving the global steel sector
Latest numbers indicate that India is going to be a key driver in saving the global steel market from collapse. For a substantive period, global steel demand has witnessed a sharp decline in demand. The resuscitation will be provided by India’s demand for steel. According to the World Steel Association, India’s steel demand will rise by 6.7 per cent to 120 million in 2023.
Other traditional consumers like China, the EU, the US and even Africa are set to witness steep decline in their demand. While the developed world is coping with the supply-chain crisis caused by the Ukraine-Russia war, the developing section like that of Africa has been caught in the crossfire of moral one-upmanship. China on the other hand will be facing the brunt of increasing covid numbers leading to steep ongoing decline in the construction sector.
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India-China steel conundrum
The trends in demand are promising for India’s future. The numbers are set to increase with more percentage points in upcoming years. However, the larger question is how will we meet these demands. By all accounts, India’s 2022 steel capacity of 118.1 million tonnes is not enough. Now, compare India’s numbers with that of China. The Communist state produced 1032.8 million tonnes of steel in the year 2022. However, its demand is projected to be only 914 million tonnes in the next year.
Obviously, it is constantly looking to dump its products. It should be beyond any shadow of doubt that India being the second largest consumer is on Chinese radar. Evidence? It has done so in the past as well. India has been a hotbed of Chinese steel consumption in the past. That too a lower grade and substandard steel. So much so that a lot of experts call China’s policy of pushing its steel into India as “dumping”. Time and again, India has imposed anti-dumping duties on Chinese steel, the most recent of which was in December 2022.
Also read: India runs a huge trade deficit with China. Oh! Really?
Steps to crank up our steel production
Not only that, India has also taken steps to crank up its own domestic steel production. India has liberalised the coal mining sector which provides great impetus to the steel sector as a fuel for the blast furnaces. In 2017, the Modi government announced a National Steel Policy of its own. The policy is aimed towards increasing per capita consumption of steel from 60 kgs to 160kgs by 2030. This should result in India’s steel-making capacity increasing to 300 million tonnes.
To achieve these goals, initiatives like MISSION PURVODAYA and PLI Scheme are in place. Through MISSION PURVODAYA, the government is focussing on harnessing iron ore and coking coal capacities of Odisha, Jharkhand, Chhattisgarh and West Bengal. On the other hand, under the PLI Scheme for speciality steel, the government is providing incentives worth over Rs 6,322 crore to promote the manufacturing of speciality steel. The Ministry of steel has already given approval to 67 ministries, which will encompass 42,500 crore of investment, 26 million tonnes of production with the help of 70,000 strong workforce.
Results have also been phenomenal. Between 2008 and 2022, our production capacity increased by 75 per cent while simultaneous increase in demand was 80 per cent. For a while, we also became a net exporter of steel to China, though the trend has not been stable for long enough to establish India’s supremacy. But, it’s promising and with the inevitable decline of the Chinese economy in upcoming decades, prospects of the rise of India’s steel sector are more than ever.
Need for shift in focus
No doubt, China is the dominant theme in any discussion about our steel sector. There is a reason why steel is a strategic sector. Steel is the backbone of modern-day industries and infrastructure. Relying on China was never a viable option. But, it’s 2023 and the truth is that we have been able to allay fears about Chinese steel in the last five years.
Competing with China in steel should now be the second priority. We should now shift our primary focus to places where demand is set to rise. The China factor has largely been taken care of by regulatory regimes.
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