Can India become a net exporter of steel on perpetual basis? Pat came the reply from a senior steel ministry official “Yes, it obviously can. But, it will take some time and in steel parlance, the word 'sometime' means at least 10 years.”
Not so long ago in 2013-14, India was indeed a net exporter of steel, but in the following two years, imports far exceeded its exports. However, with the exception of 2015-16, India’s domestic consumption grew much lower than the rate of increase in production in previous two years.
Now, looking at the country’s steel scenario, which is unlikely to alter much in the coming months, India’s imports fell by 37% while exports were up by over 35% during April-September period of current fiscal. India remained a net steel importer during the period as well. However, consumption growth was just 2.5% compared with a whopping 9% rise in production.
While India’s steel consumption growth has been anemic for past few years, growth in installed capacity has been on the rise. Further, from the present 118 MTPA capacity, India aspires to raise the capacity by 154% to 300 MTPA by 2030. Considering that the target gets achieved, India’s per capita consumption from around 63 Kg now will also have to grow in sync if the balance is to be maintained.
Higher growth in consumption could be expected from government’s push on infrastructure and housing sectors, but whether it would match the production growth rate would remain to be seen.
If it doesn’t, then export would remain the only option and for that, it must not only have to produce better quality products at a competitive rate, but also has to develop a strong market abroad and maintain the market at any cost. The government also has to incentivse exports and rein in imports at the same time.
India’s import and exports (MT):
(Source: Joint Plant Committee)