Increasing Demand for Specialty Steels in Automotives is Driving the

Growth of India’s Steel Industry

By Sarang Wadyalkar

India’s rapid economic growth is driven by the growth of India’s infrastructure

industries, and one of these is the steel industry. India’s steel industry is on the
fast track growth and is witnessing massive investments and expansion plans.
Presently, many steel plants are coming up and the growth plan is in tune with
economic growth, and the major steel-consuming sectors. The per capita
consumption of steel in India, at around 46 kg, is far below the world average of
146 kg, and that of developed countries at 400 kg. Given the strong demand
scenario, leading steel makers in India, state owned units as well as private
players, are in the process of massive capacity expansions. Both brownfield and
greenfield capacity additions are set to attain a target of doubling the current
capacity of 62 MT by 2012. One of the major contributors to this growth is the
increasing demand for high grade specialty steels.

India is among the top three steel producing countries in the world behind China
and Japan. India is witnessing the establishment of new steel plants by global steel
players, and acquisition of global capacities by Indian players, such as Tata Steel.
India’s steel industry caters to a huge domestic demand of steel mostly dominated
by infrastructure industries. At the same time other steel consuming industries,
such as automotive are also growing. The demand for special steels from these
industries is driving Indian steel makers to produce high quality and applicability
steel. Flat products as well as forgings find extensive demand from the automotive
sector.

India is the world’s second-largest manufacturer of two-wheelers and the fifth-

largest manufacturer of commercial vehicles. Almost all the major car
manufacturers are present in India and are launching new car models. The
automotive sector is witnessing growth and catering to the needs of both the
domestic as well as export market. India is becoming the hub for small and low-
cost car manufacturing. India’s auto market, excluding two-wheelers, grew at
32.69 percent in 2010, slightly ahead of China’s 32.44 percent, according to Society
of Indian Automobile Manufacturers. In the next five years, production of
passenger and commercial vehicles in India is expected to reach 4.9 million, and
two and three-wheeler production is expected to reach 35 million. With the
automobile industry setting high targets, demand for high grade steel from this
sector is going to increase and Indian steel makers will be under pressure to come
up with desired specifications of steel for automotive industry. Automation and
enterprise solutions will find extensive use and greater scope for application in
specialty steel manufacturing.

Materials for car body panels require certain specific characteristics to meet the
industry’s challenges: improved plasticity for reduced rejection rate and better
quality. Thinner and still Higher Strength Low Alloy (HSLA) steels are getting
preference for weight reduction, resulting in improved fuel economy and reduced
carbon emissions. Low variation in mechanical values, such as higher strength,
toughness, fatigue strength, elongation, and improved corrosion resistance is also
desired. Companies such as Essar Steel supplies pre-coated steels to automakers,
which is an advantage for export oriented firms.

Arriving at these characteristics of steel products is a tough task steel makers in

India face. Drawing out maximum possible output product with desired properties
and within very narrow tolerance limits is a challenge. Most of these characteristics
are attained in the cold rolling mill operation. The cold rolling mill involves a set of
complex mechanical operations taking place simultaneously. Each of these
operations requires tight control over tolerance limits to arrive at greater accuracy
in mechanical properties of metal sheet and reduce wastage. And the cold rolling
mill has to perform these operations consistently to produce numerous units of a
particular specification. The control system and instrumentation required here
involves drives, PLCs, CNCs, gauge measurement instruments, material handling
equipments, coolant and lubrication system, automatic flatness controls, and HMIs.

With increasing complexities in specialty steel manufacturing, the pressure is

mounting on steel makers as well as user industries of specialty steels. It is not
just the automation on the shop floor that matters, but the advancement on the
enterprise solutions front that decides the productivity and operational excellence
for the steel makers and its users. Optimized throughput rates, reduced wastages,
improved energy management, faster time to market, lean inventory, and greater
coordination with vendor are the key aspects of business that will drive the growth
of the industry. Both the steel makers as well as its users understand this and they
need to work collaboratively to achieve their respective goals.

Signs are evident as Indian steel majors are tying up with Japanese steel giants as
well as auto makers for special purpose steel, especially covering needs of the
automotive industry. The joint venture of Tata Steel and Japan’s Nippon Steel is
going to invest $400 million to set up an automobile venture in India. Earlier,
another leading Indian steel producer JSW Steel joined hands with Japan’s second
largest producer, JFE, to collaborate for making steel for automobiles. The two
companies will work together on energy efficiency, environmental management,
improvement of production process, quality, and yield. Indian steel maker Bhushan
Steel and Sumitomo Metals, Japan’s third largest steel producer have also come
together for a technical collaboration and marketing agreement. While these
alliances will help Indian steel producers supply steel to automobile companies
setting up base in India, working in partnerships will also help these firms in
reducing operating, working capital costs, and product inventory. The steel makers
will gain more from increased profit margins on low volume and high quality steels.
Due to increased demand for greater variety of cold rolled specialty steel products
and the business enablers required therein, the demand for automation and
enterprise solutions will also grow. All said and done, it will be interesting to see
how automation and enterprise solutions suppliers help these companies to meet
their challenges.

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