Steel Industry in India takes a beating
The Steel Industry in India is at its all Industrial low than never before, especially while dealing with its rival China, because of its neighbor which has mastered in the art of mixing low grade iron with a high grade one to make it an acceptable quality of steel. In the recent years, due to slowdown of economy, China has embarked on an aggressive mode to sell various products, particularly from steel industry, where it has pioneered in mixing low grade iron ore with high grade ores from Brazil and Australia to produce an acceptable quality of steel. India is yet to learn this technique!
If we revert back to the past, for couple of years, China used to be the biggest importer of low grade iron ore from the mines of Goa, that has peaked at 120 million tons in 2009-10, by using this to mix with high grade ones. However, Due to illegal mining activities in those times government stopped leasing out the production from those mines. But still this hasn’t halted China to produce steel and became a surplus steel producing country in the world.
Most of the times Steel Industry was dominated either by Japan or South Korea somehow Russia was also in the league of leading producers of steel by supplying it as a demand from the oil rich middle eastern countries.
China has begun to play a vital role in producing steel by surpassing all the above countries, with a surplus steel production capacity reported to be around 200 million tons which has begun to offer export incentives to all its steel exporters that has been ranging from 13% to 28% in export value. Indian imports for those steel products have gone up and the bilateral trade was always in favor of China. Even today, 36% of imports in India come from China that ranges from toys to steel, that has valued around 2.8 million tons in 2014.
While imports of special steel products that are not manufactured or available in adequate quantities is quite understandable from the indigenous sources, reckless dependence of even basic steel products, some are reported to be poor on quality, has begun to make Indian Steel Industry tumbling. Indian manufacturers are up in arms against such move and demanding to ban product imports especially from China and impose heavy import duties to make those products economically unviable.
To encourage Indian Steel Industry, they need to come up with aggressive plans to manufacture products with high on quality, even though slashing of prices for high grade ore Indian manufacturers are facing the brunt of not meeting up the standards as they opt high grade ore for their produce, and recent press reports show that large quantity estimated to be more than 12 million tons of low grade ore are lying in our ports for shipment, but this cannot be used by Indian manufacturers. The steel industry, therefore, needs to adapt the best practices to use low grade ores.
In these difficult times the solution to these problems faced by local steel producers is either adapt best possible production technologies in order to produce steel or government has to invite Chinese firms to invest in setting up plants in India either with collaboration or under 100% Foreign direct investment to make the products available relatively economical ready for supply by maintaining better quality standards.
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