Challenges faced by the Indian steel industry

Challenges faced by the Indian steel industryThe Indian steel industry is one of the most promising industries in the country and across the world. Consumption of steel is an important indicator of economic progress of any country; it increases with an increase in demand for infrastructure, automobiles, transportation, etc. India is blessed with a rich bed of iron ore and steel in mainly eastern parts of the country like Orissa and West Bengal, which contribute to more than 70% of the total steel production. There are a handful of companies which are known for their phenomenal growth in this field, such as Tata Steel, Jindal Steel and Steel Authority of India Ltd. (SAIL). The total production is set to touch 124 million tonnes by the end of 2012 and further reach 275 million tonnes by 2020, maintaining an impressive CAGR of 8%. This sector, is however, dwarfed by numerous obstructions listed below (Indicus, 2009).

Major challenges

  1. Human Resources: Availability of efficient manpower has been listed as the biggest hurdle in the development of Indian steel industry. Attracting and retaining the best engineers is a challenge task as employees find service sector a more lucrative opportunity for professional growth. Employees do not wish to take up the challenges offered by manufacturing sector, opting for glamorous desk jobs instead.
  2. Manufacturing & Mining: Depleting resources and reserves of iron ore, steel etc. is one of the biggest challenges the industry is likely to face. Competition is increasing, resources are limited. It is an intense tug of war between the biggest steel giants for mining. Amidst all this chaos, small sized firms find it difficult to survive for a long period.
  3. Technological Innovation: There is a need for introducing eco-friendly technologies in the mining and production process. Only with the help of technologies like recycling of steel, production efficiency, etc. can they sustain for a longer period.
  4. Government policies: Government initiatives such as better infrastructure, stricter norms to bring demand at part with supply, etc. are needed for management of the industry (Tata, 2008).

Lastly, global economic forces also play a major role in determining the strength of Indian steel industry. An increasing number of international steel giants such as Arcelor-Mittal are entering the Indian shores for expansion. In order to tackle the problem of limited resources, these companies are considering consolidation of forces. One of the biggest steps suggested to the government is banning the export of iron ore, which will ease the problem of shortage of resources.


Priya Chetty

Partner at Project Guru
Priya is a master in business administration with majors in marketing and finance. She is fluent with data modelling, time series analysis, various regression models, forecasting and interpretation of the data. She has assisted data scientists, corporates, scholars in the field of finance, banking, economics and marketing.

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