The metallurgical industry has played a significant role in India’s economic growth. India produces 95 minerals, 4 fuel related minerals, 10 metallic minerals, 23 nonmetallic minerals, 3 atomic minerals and 55 minor minerals including building and another type of minerals (FICCI, 2018). The mineral production in India has shown significant growth at CAGR of 5.72% between 2013-14 and 2017-18 to reach an estimated amount of US $ 17.62 billion in 2017 -18 (Indian Brand Equity Foundation, 2018).
The steel industry of India
The metallurgical industry in India can be segmented into various sub-industries such as aluminium, Copper, lead, iron, zinc, steel etc. Among the various industries, the steel and aluminium are the key industries that have displayed a substantial growth in the past few years. Steel Industry is acting as a key industry because all other industries depend on the iron and steel industry for machinery. Moreover, steel is required to manufacture a wide variety of engineering goods and defence equipment. In terms of the growth of the steel industry, India has emerged as the third largest steel producer with a production of 101.4 million tons of crude steel in 2017 (International Trade Administration, 2018). In addition to this, India is also the largest producer of steel mica in the world. Furthermore, the growth of iron core production in the country increased from 129.32 million tons in 2015 to 210, 47 million in 2017. Lastly, the steel industry in India also contributes about 2% of India’s GDP and employs about 600,000 people.
Indian exports have grown from 3.46 million tons of finished steel during the year 2010-11 to 4.91 billion in 2011-12 and reached 10.91 billion in 2017 (Francis, 2015; Sabnavis, Economist, & Bhati, 2018). The exports mainly comprise plates, hot rolled coils, coated sheets, pig iron and iron ore. U.S and China are the main recipients of India steel exports. In terms of imports, India has shown a declining trend, the imports declined from 9.8 million tones in 2017 to 8.9 million tons in 2017.
Aluminium industry of India
Apart from the steel industry, the aluminium industry has generated high growth due to its high production capacity. The aluminium production has grown at 17% in 2017 to emerge as the fourth largest aluminium producer in the world (Singh, 2017). The demand for aluminium has arisen from automotive, construction and packaging industries. The rail and power networks and the infrastructure development plans of the government have driven the aluminium demand in the construction industry. The aluminium exports have witnessed a sharp rise of 34% during the year 2017-18 (FICCI, 2018; Sabnavis et al., 2018).
The growth of the metallurgical industry
The growth in the metallurgical industry can be attributed to the rise in infrastructure development and automotive production. The vast mineral potential has offered mining leases granted for 20 to 30 years. Amongst all industries, the Indian iron and steel industry enjoys a fair advantage in terms of cost of production, availability of raw material and cheap labour. The strong demand for iron and steel is derived from various other industries like automobile, consumer durables and infrastructure. In addition to this, the growth in the production of iron mica is driven by large bauxite reserves that exist in India.
The government has adopted a vast number of measures to boost the growth in the metallurgical sector, particularly in the iron and steel industry. The government has allowed 100% FDI through the automatic route. In addition to this, the government has reduced the duty payable on the finished steel products through a streamlined process. Furthermore, to encourage R & D activities, the ministry of steel has been by funding through steel development fund and plan scheme. Under this scheme, the government has approved 8 projects with a total cost of Rs 123.27 crore ($20.38 million, FICCI, 2018).
Challenges in the metallurgical industry
Despite the progress within various industries, India struggles to face supply challenges. This is due to the huge cost incurred in the production of coal. They have continuously grown to reach $39.6 million in 2017 (Singh, 2017). In addition to this, the lack of capital investment has hindered the growth of other metal industries. Overall, the rapid growth in demand from the steel industry, power production and demand for coal has a positive influence on the metal and mining industry. But, limited availability of coal can hinder the growth process. Therefore, India needs to focus on improving competitiveness through expansion of renewables by increasing the contribution of solar and wind energy.
The scope of future growth in the metallurgical industry indicates that India can achieve high development in iron, ore, and bauxite. In addition to this, the metal and mining industry is expected to create employment for about half a million skilled and unskilled labour force. Furthermore, the future prospects indicate that India’s steel consumption is forecasted to grow annual by about 5-6% to reach 300 million tonnes by 2025-26(Indian Brand Equity Foundation, 2018). Furthermore, India has a strong economic outlook and fast-track growth in steel production to reach the second largest steel producer in a few years.
- FICCI. (2018). Trends & Opportunities for Indian Pharma. Retrieved from http://ficci.in/spdocument/22944/india-pharma-2018-ficci.pdf.
- Francis, S. (2015). India’s Manufacturing Sector Export Performance During 1991-2013: A Focus on Missing Domestic Inter-sectoral Linkages. Institute for Studies in Industrial Development, (May), 1–57.
- Indian Brand Equity Foundation. (2018). Indian Metals and Mining Industry Analysis. Retrieved October 29, 2018, from https://www.ibef.org/industry/metals-and-mining-presentation.
- International Trade Administration. (2018). Steel Imports Report : India, 1–8.
- Sabnavis, M., Economist, C., & Bhati, B. C. (2018). Steel Review & Outlook : June, (June), 1–8.
- Singh, R. (2017). Indian Metals & Mining.