Towards $5 trillion economy: Can boosting Indian steel sector with investments enhance growth rate?

A challenging but a feasible vision of the government to make India a $5 trillion economy and a global economic powerhouse by 2024-25 needs consistent economic growth at an average rate of 8% in the next four years. However, amounting to a 6.57% decline in exports in September, the current slowdown has made the objective more challenging.

To reduce the existing demand-supply gap and take the country towards an ambitious goal, the government has now set the emphasis on increasing steel production to 160 million tonnes.

According to the statement by the Ministry of Steel, the existing capacity needs to be increased through competitive, efficient, environment-friendly ways, with an adherence to global safety and quality standards. To facilitate the right opportunities for the Indian steel sector, the government has committed investments worth Rs 100 lakh crore in infrastructure sectors, including several steel-intensive sectors like offshore & railway bridges, piped water for all, 100% electrification, etc.

The roadmap designed by the government includes increasing the steel usage to boost demand generation, adding more greenfield projects, setting-up value addition focused steel clusters, increasing accessibility for both the consumers and secondary steel sector, promoting research & development, etc.

With a grassroots experience of the industry, Sanjiv Mehta, CEO of Shah Brothers Ispat Pvt. Ltd., one of the country’s leading steel distributors, states that for the economy to grow, we need immense contribution from the Indian Steel sector. For the industry to produce more value-added projects, we need an active producer-distributor partnership. However, the sector also needs a good boost from the government, added Sanjiv Mehta, Shah Brothers Ispat Pvt.

To ensure competitiveness in the sector, the government has been making the policy frameworks more inclusive. Dharmendra Pradhan, Minister of Steel, said, our government has made raw material even more accessible to the secondary steel sector, which the industry must reciprocate by producing more value-added products.

Furthermore, such initiatives by the government are likely to improve the ease of doing business and generate new jobs. While the crude steel capacity in the country has increased to 142 MTPA, the demand has grown consistently, reaching 99 MTPA in FY19. Although, India has remained a strong global steel player in FY19, the per capita consumption and distribution is still limited. Thus, such measures by the government can boost the numbers, thereby, complementing the $5trillion economy goal.

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