Notwithstanding poor growth in steel demand this year, state-owned SAIL believes the future of the industry is bright as India's per capita consumption is low and the government is planning to increase infrastructure spending.
India's steel demand grew by just 0.5 percent to 53.78 million tonnes during the April-December period of the current fiscal, impacted by economic slowdown.
Though India's per capita consumption has increased from 29 kg in 2000 to 59 Kg in 2012-13, in rural areas, home to around 70 percent of the population, per capita consumption is approximately one-fifth of the national average at 12 Kg.
This is miles apart from the world average (216.9 kg) and it is where the opportunity lurks, SAIL Chairman C S Verma said.
"The future of the Indian steel industry is indeed very bright and there are several enablers which indicate this and includes low per capita consumption and government's plan to hike infrastructure spending," he said.
Stating that government plans to increase infrastructure spending from the current 5 per cent of GDP to 10 per cent by 2017, he said India is committed to investing USD one trillion in infrastructure during XIIth Five Year plan.
"Taking 15 per cent as steel component in the total investment, then it can generate additional demand worth USD 75 billion of steel in the next few years or USD 15 billion worth of additional demand a year or in terms of quantity, an additional demand of 18.75 million tonnes per annum," he said.
Besides, the National Manufacturing Policy envisages the share of manufacturing in GDP to increase from 14 per cent in 2012-13 to 25 per cent by 2025 with manifold increase in steel intensity translating into finished-steel consumption of230-255 MTPA by 2025, Verma said, adding all these augur well for the steel industry.
Indian steel industry has also grown at a handsome pace from less than 22 million tonnes (MT) in 2000 to about 81MT in 2012-13 at a CAGR of 11 per cent. While it achieved the first 27 MT of production capacity in 50 years between 1951-52 to 1999-2000, the next 27 MT came production in next 10 years - from 2000-01 to 2009-10.
The country proposes to achieve 300 MTPA capacity by 2025.
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