An overview of the Indian steel industry

The country is the third largest manufacturer of Steel but is far behind China, which is the largest manufacturer of Steel.

The Indian steel industry is currently in new development stage, following the de-regulation that we have seen recently, and is going up and high due to the resurgent economy and increased demand for steel. The population of our country has also contributed to the industry becoming the 3rd largest producer of crude steel in 2015 and 2016.

India is also the 3rd largest finished steel consumer in the world, which it stayed it 2016. These rankings are based on the data provided by the World Steel Association for many years. In any de-regulated and liberalised market scenario, the Government must act as a facilitator laying down guidelines and establishing a mechanism for a conducive environment to ensure improvement in efficiency and performance of the steel sector.

In 2017, the Government released the National Steel Policy, where it laid down the roadmap for encouraging long-term growth for the industry till 2030-31. They have concentrated both on the demand and supply side of the industry. This is an updated to the 2005 version of National Steel Policy which concentrated on the growth prospects by 2019-20. The Government continues to focus on the PM’s vision of ‘Make in India’ and has encouraged domestic manufacturing.

The Steel industry took its first step towards liberalisation in the year 1991. It was de-licensed in 1991 and then de-controlled in 1992.

The Government took some major steps to improve the market condition of this industry. Here are some of the factors which have affected the pricing of the steel.

  • In 1992, Government abolished price regulation of iron & steel.
  • The steel prices are now determined by market forces of demand and supply.
  • A lot of factors influence the domestic steel prices, like demand-supply conditions in the market, international price trends, etc.
  • Ministry of Steel administers Inter-Ministerial Group or IMG which is given the task of monitoring and coordinating major steel investments in the country.
  • The Government monitors the market conditions and makes changes in the fiscal and other policy measures accordingly, thereby fulfilling its responsibility as a facilitator.
  • GST is applicable at the rate of 18% on steel and export duty on steel items is exempted.
  • Export duty of 30% applies to all forms of iron ore except low grade or the ones with a Fe of less than 58%. Others are exempted.
  • After the imports saw a huge rise, the Government had increased the import duty on most steel items twice, by 2.5%. Measures were taken to promote anti-dumping and safeguard duties, on the applicable iron and steel items.
  • The steel products which do not get the approval of the Bureau Of Indian Standard, are banned. This measure was taken with an aim to curb the steel imports.
  • In 2016, the Indian Government imposed the Minimum Import Price (MIP) condition on 173 steel products, which was extended thrice at first and later ceased to be effective earlier this year in February.
  • The government has constituted a Steel Price Monitoring Committee which is required to monitor price rationalisation, analyse price fluctuations and advise all if any concerned information or irrational price behaviour surfaces.

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