India Producing 300 Million Tons of Steel Per Year? Fat Chance.

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With JSW Steel, Essar Steel and Steel Authority of India increasing their exports, and with a weaker rupee compared to the dollar and some supply constraints, India is looking beyond poor near-term demand into the future. Get more context in Part One of this article here.

The good news around steel has even cheered up the Indian government. It announced it was setting up a task force to prepare a blueprint for promoting research and development in the steel sector in a bid to help India triple its production capacity to 300 million tons.

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The seven-member task force will have members from various public and private sector steel units. The plan has to be submitted by Feb. 15.

So how realistic is this public/private endeavor?

R&D Blocks the Way

report in The Economic Times stated a letter was sent off to some of the steel majors by a high official of the Steel Ministry, pointing out that India was poised to become the second-largest steel producer in the world and was projected to achieve a capacity of 300 million tons per year by the middle of next decade.

However, the research and development base for actual technology development was inadequate, he said.

“With regard to funding for the R&D Mission/Centre, it was decided that there may be a corpus with a one-time contribution from government and industry, in addition to an annual stream of income in the form of a charge per ton of steel production,” according to the article.

MetalMiner previously reported on how the growth of Indian steel was lumbering along despite the ambitious target set by the Indian government last year to triple steel production capacity to 300 million tons by 2025.

What This Means for Steel Buyers

Domestically, those who plan to buy steel in 2014 will have to shell out a bit more. Overall, if India does manage to alter its course and set itself on the path of 300 million tons by 2020, it could bring a correction in the domestic rate of steel in the long-term.

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