One of the leading national trade representative bodies of India, the Confederation of Indian Industry (CII), while talking about the challenges India’s steel sector faces, has said the next few years will be “extremely critical” for the long-term development of India’s steel industry.
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According to the CII, several infrastructural and operational hurdles will have to be overcome first.
Listed below are some of the major challenges that Indian steel producers need to tackle to make the Frost & Sullivan forecast come true (not necessarily in Pareto order):
Challenge #1: Resources
Dwindling reserves of iron ore and other resources is a critical challenge. Though some of the Indian states still boast of vast reserves of ore, rampant illegal mining and a haphazard mining policy has ensured that much of it has either fled the country or has been used without notice to local governments.
Then there’s the present mining ban to contend with, which has slowed down steel production. India also relies heavily on coking coal imports, a situation which has just begun to change.
Anyway, raw material is limited, and its pricing and resultant pricing war between big and small steel manufacturers is something that needs to be sorted out, the sooner the better.
Challenge #2: Infrastructure
This has become a bugbear in the past few years.
Basic infrastructure like roads, ports and power need to be drastically improved to boost productivity of the steel industry. Then, there’s the blow-hot/blow-cold land acquisition policy of the government.
Land acquisition for steel plants has become one of the biggest headaches for steel manufacturers; even those who want to come in from other nations to set up plants in India.
South Korea’s Posco plant in Odisha is a classic example. After 10 years, it has barely moved away from the drawing-board stage. The environment clearance hurdle is yet another problem area.
Sohrab Darabshaw contributes an Indian perspective to MetalMiner.