CURRENT STATUS OF THE

INDUSTRY

Like a human has spinal cord to support its body the steel industry is the backbone
of an economy. According to a report published by NDTV on 5 th of April, 2018 it was said
that India’s production of steel stood at 93.11 million tonnes (mt) for the time slot April 2017
to February 2018 April. This amount was approximately 5% up compared to previous year.
This growth has helped India to overtake Japan in the race for the second position in the list
of producers of crude steel in the world.

Talking about laws, well over the year many laws and government interventions has
happened in every industry. A couple of years ago in 2016 New National Steel Policy was
formulated by the Ministry of Steel’ this law was constructed with the purpose of retaining
the objectives included in the National Steel Policy (NSP) 2005. Under the policy, the
government of India claimed that all domestically manufactured steel and iron products will
bag the preference in context of government tenders. Another benefit the Indian steel makers
importing intermediate products or raw materials will get is of domestic procurement
provision by just adding minimum of 15% value to the product.

Again the steel ministry of India in order to promote innovation, has thought of
constituting award for the secondary steel player. he ministry wants to bring domestic
secondary players at par with the primary steel players. At the first edition of Secondary steel
award Union Minister Bijendra Singh said that the ministry opines and also desires to bring
the domestic secondary players at par with the primary steel player.

Now coming to GST which was there in headlines for quiet some time. Well the
impact was diverse for example the Kitchen utensils got cheaper because previously we
payed a tax of 19.5% on them but now it has come down to 12%. But then the Barbecue sets
got costlier under GST because it was charged a percentage of 28% which is higher than the
previous tax rate same goes for the sanitary items like tap, facet etc. Again there were certain
area which had neutral effect too like laying of railway track. The transportation service for
transporting steel is kept under 5%. because of this the steel industry is likely to enjoy the
benefit of lower tax rate. Not just this even the major inputs used by them like coal and iron
ore under GST is under the slab of 5% as a result input cost will decrease. On the whole we
can see the logistic cost dripping, so we can conclude that steel industry would initially have
a higher cost because of the transition and also increase in working capital requirement.

There had been a list economic reforms initiated by the Government since 1991.
There had been a system of licensing under which the firms had to seek an official consent
for capacity creation this has been abolished just a few locational restrictions still exist. Steel
industry no more belongs to the list of industries reserved for the public sector. Again, India is
moving towards becoming a capitalist nation and for this we need the firms to be competitive
in order to do so the Price and distribution controls imposed by government had been
removed from January 1992.
On a yearly basis 5.7%is the expect rate of increase in the steel consumption.
Putting it in numbers it is expect to move from 102.34 million tone in financial year 2018 to
128.6 million tons by the time 2021 arrives. The Government of India has also played a
significant role by allowing 100 per cent foreign direct investment in the steel sector under
the automatic route.
Among the list of interventions made by government the National Steel Policy
2017 recognizing SRTMI for the purpose of pursuing high end research with an aim to make
India the global leader is a very recommendable decision. Let’s take a glimpse of the salient
features of SRTMI. first and foremost, SRTMI most significant task is to coordinate and
network between the steel industry, national laboratories and academic institutes in order to
promote R&D in the Iron & Steel sector. Along with taking care of R&D, SRTMI will also
persistently seek to look after the skill development, training and IEC initiatives for the steel
sector. These features will play a major role in developing the entire industry.
If we strike a discussion about producers in particular, they are of two types namely the
integrated producers and the secondary producers. Currently there are three big names in the
list of first category i.e. the integrated producers and they are the Steel Authority of India
Limited (SAIL), TISCO, and Rashtriya Ispat Nigam Limited (RINL). Of the three, SAIL is
the largest owing to its large steel production capacity plant size. Secondary producers
include Essar Steel Ltd., ISPAT Industries Ltd., and JSW Steel Ltd. There are 120 sponge iron
producers; 650 mini blast furnaces, electric arc furnaces, induction furnaces and energy
optimizing furnaces; and 1,200 re-rollers in India. The market of finished goods made of steel
is mostly dominated by TISCO and SAIL. However, on a whole the competition is minimal
in steel industry and as there are few renowned players only here is cartelization happening in
this industry. From the competition perspective its actually a mixed bag lacks exact
explanation.