Steel Firms Invest $57 Billion for Increased Capacity in India

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Researched by Industrial Info India (Delhi, India)--Demand for steel in India is expected to grow dramatically in the next few years. The government of India estimates that steel demand is growing at an annual rate of 9.2%. Currently, the country relies on imports to meet some of this demand. Steel imports have risen sharply from 1.4 million tons in 2001-02 to 7.3 million tons in 2009-10. This underlines the need to expedite domestic capacity expansions and grassroot construction.

According to India's Steel Secretary P.K. Misra, "About 10 million to 15 million tons of steel capacity will be added in the current year, and 30 million tons of steel capacity is expected to be added in the next two years." If this trend continues, then demand for steel will be approximately 193 million tons in 2020 and 263 million tons in 2025. Misra said due to the 20% export duty imposed on iron ore, iron exports were already declining.

According to Industrial Info's Metals & Minerals database there are more than 80 major steel mill projects, representing $57 billion of investment, that are currently under development in India. These projects represent 40 million metric tons of capacity addition. Many small and mid-size companies are seizing opportunities in the midst of this strong growth. Aaress Iron and Steel Limited (Koppal, Karnataka) is building a grassroot steel Mill in Koppal, which is becoming a major hub for steel projects. Bhushan Steel Limited (New Delhi) is looking to enhance its production capacity with a grassroot steel mill in Asansol.

In light of these developments, the government of India is in the process of framing a new national steel policy. The government will soon appoint four task forces to address issues that may be holding up planned steel projects. The new policy will also look to propel projects in a forward direction in a timely manner.

The need for new policies was felt in the light of the changing supply-demand scenario and concerns about rising imports. "An in-principle decision to replace the National Steel Policy 2005 has been taken, and a panel--the Apex Committee on Formation of New Steel Policy, headed by Steel Secretary P.K. Misra--is working toward a blueprint of the policy," a steel ministry official said.

The four task forces will come out with reports on economic considerations, technical, environmental and manpower issues. They will also look into the issues affecting raw material security and infrastructure bottlenecks.

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