Back on Growth Path
The corridors of the Ministry of Steel at New Delhi’s Udyog Bhawan are buzzing once again. After a prolonged slump, investors are lining up to exploit the sector’s vast untapped potential.
The biggest statement of intent was made by South Korean Ambassador to India Shin Bongkil on April 20 at a virtual roundtable conference organised by the Indian Chamber of Commerce. Bongkil said South Korean steel giant POSCO was again looking at setting up an integrated steel plant in Odisha at an investment of $12 billion, which would make it the country’s biggest FDI project.
While Posco is yet to officially confirm it, Bongkil’s statement comes barely four years after the company scrapped plans to set up a similar steel plant in Odisha that it had been chasing since 2005. Frustrated by the slow progress and a global downturn in the commodity cycle, which necessitated conservation of resources, POSCO had even surrendered 1,880 acre of land it had got from the government in 2017. Plans for smaller steel plants in Karnataka and Jharkhand were also junked.
At that time, it was seen as a big blow to India’s attractiveness as an investment destination. Today, it would act as a shot in the arm for an economy already struggling with low private sector investment and one that is trying to revive itself from the ravages of the pandemic.
Over the last decade, India has made steady progress as a steel producer, expanding its output from 58 million tonnes (MT) in 2008 to 110 MT, growing at double the pace of the world. In the process, it has overtaken Russia, the US and Japan to become the second-largest steel-producing nation after China. Yet, it is still far from exploring its true potential.
India has one of the lowest per capita steel consumption at just 74.3 kg, compared to China’s 633 kg, the US’ 297 kg, Japan’s 498 kg and Germany’s 418 kg. Keeping this in mind, the government has set a target of achieving 300 MT of capacity by 2030/31, more than double the current 142 MT. Given that it
