With the passage of the much debated GST Bills, India inches closer towards historic tax reform since Independence paving the way for the roll out of new taxation regime that will see India enter a new age in the digital world. Besides, India’s consumer confidence presently is at its peak among emerging market peers. This buoyancy has India at the cusp of a revolution of sort with the government announcing daily quota of new measures to trigger economic growth at a pace never seen before implying immense demand for metals will be obvious.
The steel industry is witnessing a vigorous surge in demand for the metal in infrastructure, manufacturing, construction, automobiles and white goods sectors that were hit by the demonetization move. In such a scenario, the country’s primary steel makers have to gear themselves with modernisation and expansion plans. Besides enhancing production capacity, the industry needs to eliminate vital issues of technological obsolescence and adopt energy efficient, environment-friendly practices by providing higher returns on investment. The existing production sites need to be upgraded to meet stringent quality requirements of discerning customers.
However, overcapacity in steel has plunged the global industry into a crisis. And to rub salt in the already beleaguered domestic sector’s wounds, the unhindered inflow of cheap steel battered it further. In response, strong measures like clamping Minimum Import Price, anti-dumping duty and safeguard duty resulted in a marked fall in imports. This decline in steel imports has coincided with a strong growth in steel exports by domestic mills, supported by an improvement in the pricing scenario in international markets. India is now set to emerge as the next big destination for steel production and eventually an exporter of steel. This potential cannot be realized without support and proactive policy structure from the concerned authorities.
Iron ore, the critical input in steelmaking, has to be made available primarily for the domestic steel industry at competitive prices in the wake of weak global demand scenario triggering a fall in prices. There is need for prospecting deeper into the earth crust to extract more resources from existing mines as the reserves are fast depleting. New technologies for ultra-deep mining have to be developed and sustained.
Ferro alloys constitutes the other most important additives in the production of steel. The alloys are critical input for producing all types of steels. Fundamentally, the main function of ferroalloys is that it raises the resistance level of steel to corrosion and oxidation, improves hardenibility and tensile strength. Presently, this industry is experiencing a bad phase with rupee depreciation, high power tariffs and tight-rope competition. As the industry is power intensive, energy should be made available at uniform tariffs at par with international level. The customs duty need to be increased to 7.5 percent from 5 percent to ward off cheaper imports from rival countries. Also, the industry will thrive as consumption of steel is set to rise with the government undertaking various infrastucture initiatives and rapid urbanization.
With the country’s pronounced growth-related ease of doing business initiatives, sporadic reform programmes and the roll out of GST, now a mere formality, India is well on a roller-coaster ride to emerge as an economical and industrial power house.