Steel industry has a multiplier of 6.8% to India's GDP says Ms Aruna Sundararajan, Secretary, Ministry of Steel
As India moves towards $ 10 trillion economy and aspires to achieve ambitious target of manufacturing contributing 25% to GDP, the steel industry is poised to play a pivotal role, said Ms Aruna Sundararajan, Secretary, Ministry of Steel, Government of India in a session on Steel at the Conference on Championing Manufacturing in India - Excellence, Growth and Employment. The Secretary added that the Steel industry has a multiplier of 6.8% to GDP and apart from employing 6 million people directly, it provides associated employment of more than 2.5-3 million. She said that Steel being a core sector, it is essential to have a robust steel industry for any economy to develop its economic and defence security, infrastructure and India's growing urbanization.
The Steel industry is crucial to change the face of impoverished states of central and eastern India. Moreover, India's steel industry is very much competitive. Six Indian steel companies are amongst the world's most competitive firms. However, India's per capita steel consumption is low which should be increased. Pointing the biggest challenge of dumping faced by the sector, she said, As long as there is excess capacity in the world, we need to be more competitive through three ways - the industry should be qualitatively better; it has to be the most cost competitive and be environmentally sustainable.
Ms Sundararajan further stated that all stakeholders including policymakers, industry and others need to be brought at a single platform. To address high cost of capital, Government is looking long term funding (5/25) and also working on operationalizing infrastructure funds. In coming months, with National Investment and Infrastructure Fund (NIIF) in place, India will be able to lower cost of funds. Adding to this, Mr Seshagiri Rao MVS, Co-Chairman, CII National Committee on Steel and Joint Managing Director and Group CFO, JSW Steel Ltd said that steel being a long gestation industry; requires cyclical funding at different stages to meet its requirements.
Also to address the environmental challenges, Japan is interested to fund Indian companies in exchange of Carbon Credits. Government is also talking at multilateral funding to address the sustainability issues, added Ms Sundararajan. Answering to the question of environmental sustainability being cost negative, Mr P Madhusudan, Chairman, CII National Committee on Steel and CMD, RINL pointed that cutting carbon emission actually help in utilizing energy optimally and 40 MW of their energy consumption is through conversion of waste heat and gas. He said that leveraging India's mineral resources is a great opportunity to Indian industry as raw material cost contributes to over 30% of the overall cost.
In his earlier remarks, with regard to the issue of dumping Mr Rao said that China lost around $100 billion in 2015 against a profit of $200 in 2014.
Highlighting the fact that logistics adds over 30% to the cost of production, Mr B K Das, Vice President (Iron Making), Tata Steel Limited said, Indian Steel Industry's global competitiveness will largely depend on the logistics factor.
Mr Sridhar Krishnamoorthy, Managing Director, Gerdau Steel said that at times, there is mismatch in capacity and demand. Focus should also be given on labour productivity and skills.