STEEL

June 2021
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Table of Contents

Executive Summary 3

Advantage India 4

Market Overview 6

Recent Trends and Strategies 16

Growth Drivers 21

Opportunities 27

Key Industry Contacts 30

Appendix 32

2
Executive summary

Strong growth opportunities Second-largest

• Demand for steel from different sectors will producer of crude steel
drive this industry.
• Consumption of steel by India’s • In FY21, the production of crude steel and
infrastructure segment is expected to finished steel stood a 102.49 MT and 94.66
increase to 11% by FY26. MT, respectively.
• Steel demand from the automotive sector is • According to CARE Ratings, crude steel
expected to increase due to rise in the production is expected to reach 112-114 MT
demand for automobiles. (million tonne), an increase of 8-9% YoY in
• The new Vehicle Scrappage policy will help FY22.
in reducing steel prices as the policy • SAIL reported 5.6% growth in crude steel
enables recycling of materials used in old production for the fourth quarter of FY21.
vehicles. The production stood at 4.55 MT against
• On the healthcare front, key steel producers 4.31 MT in the same period in FY20.
are now exceeding their capacities to • India surpassed Japan to become the
produce oxygen cylinders for COVID world’s second-largest steel producer in
patients. 2019, with crude steel production of 111.2
• The Smart Cities’ Affordable Housing and million tonnes. India overtook the US as the
industrial corridors are a few government second-largest consumer of steel in 2019.
intitivates to boost the steel industry • Moreover, capacity increased to 142.29
• About 158 lakh metric tonnes (MT) of steel million tonnes (MT) in FY20 and the figure is
are likely to be consumed in the anticipated to rise to 300 MT by 2030-31.
construction of houses sanctioned under the • Steel companies are looking to restart
Pradhan Mantri Awas Yojana (Urban). FDI in steel industry expansion projects on the back of surging
steel process with a capacity addition of 29
• Policy allowing 100% FDI (via the MT.
automatic route) in the steel industry has
boosted investments.
• Between April 2000 and March 2021,
Indian metallurgical industries attracted
FDI inflows of US$ 14.74 billion.

Note: MTPA - Million Tonnes Per Annum, MT- million tonnes

Source: World Steel Association, Ministry of Steel, News Articles

3
Advantage India

4
Advantage India
1. Robust Demand 4. Increasing Investment
► India’s finished steel consumption is ► To achieve steel capacity build-up of
anticipated to increase to 230 MT by 300 MTPA by 2030, India would
2030-31 from 93.43 MT in 2020-21. need to invest US$ 156.08 billion by
2030-31.
► In April 2021, India’s finished steel
consumption stood at 6.78 MT. ► The industry is witnessing
consolidation of players, which has
► To drive post COVID-19 economic
led to investment by entities from
recovery, for the government has
other sectors. The ongoing
planned investments in roads,
consolidation also presents an
railways, metro connectivity, industrial
parks, industrial corridors, DFC,
1 4 opportunity to global players to enter
the Indian market.
transportation of water, oil and gas,
transmission towers, affordable
housing. All these sectors will drive 3. Policy Support
demand for steel. ADVANTAGE
INDIA ► The National Steel Policy (NSP) 2017
was implemented to encourage the
2 3 industry to reach global benchmarks.
2. Competitive Advantage ► Government introduced Steel Scrap
Recycling Policy to reduce import.
► As of 2019, India is the world’s
second-largest producer of crude ► Export duty of 30% has been levied on
steel (up from eighth spot in 2003) iron ore* (lumps and fines) to ensure
with 111.2 MT. supply to domestic steel industry.
► Easy availability of low-cost ► The Government of India raised import
manpower and presence of abundant duty on most steel items twice, each
iron ore reserves make India time by 2.5%, and imposed measures
competitive in the global set up. including anti-dumping and safeguard
duties on iron and steel items.
► India is home to fifth-highest reserves
of iron ore in the world. ► Under the Union Budget 2021-22, the
government allocated Rs. 39.25 crore
Notes: MT - Million Tonnes, FDI - Foreign Direct Investment, ^National Steel Policy 2017, #USGS Mineral Commodity Summaries
2020, *except low grade (below 58% ), MT- million tonnes , MoM – month over month
(US$ 5.4 million) to the Ministry of
Source: Metallurgical and Materials Engineering Division Board Steel.

5
 Market Overview

MARKET OVERVIEW

6
Evolution of the Indian steel sector

1907-18 1923-48 1954-64 1973-92 1993-2014 2015-20

 Production of steel  Mysore Iron and  Hindustan Steel Ltd  SAIL was created in • Foreign players • In 2019, India
started in India Steel Company was and Bokaro Steel 1973 as a holding began entering the ranked as the
(TISCO was setup set up in 1923. Ltd. were setup in company to oversee Indian steel market second-largest
in 1907)  According to the 1954 and 1964, most of India's iron • No license crude steel producer
 IISC was set up in new Industrial Policy respectively. and steel requirement for in the world.
1918 to compete Statement (1948),  In the early 1990s, production. capacity creation • Between April 2020
• Imposition of export and January 2021,
with TISCO. new ventures were the public sector  In 1989, SAIL
duty on iron ore, to India’s cumulative
only undertaken by dominated steel acquired Vivesvata
focus more on production of crude
the central production. Iron and Steel Ltd.
catering growing steel stood at 87.21
Government.  Private players were  In 1993, the domestic demand MT and finished
in downstream Government set • Decontrol of steel at 76.04 MT.
production mainly plans in motion to domestic steel
producing finished partially privatise prices
steel using crude SAIL. • Launch of Scheme
steel products. for promotion of
Research and
Development in Iron
and Steel sector.

Notes: (1)TISCO - Tata Iron and Steel Company; IISC - Indian Iron and Steel Company; SAIL -Steel Authority of India Ltd; MT- million tonnes

7
Structure of the steel sector

Steel

Form Composition End use

Finished Non-alloy
Liquid steel Crude steel Alloy Structural steel
steel steel

Low
Ingots Flat Stainless carbon Construction steel
steel

Medium
Silicon Rail steel
Semis Non-flat carbon
electrical
steel

High
High
carbon
speed
steel

Source: Report on Indian steel industry by Competition Commission of India

8
Steel production capacity has expanded rapidly

Crude Steel Production Capacity in FY19 – By Route

Crude Steel Production Capacity (in million tonnes)
(in million tonnes)

290

300
265
240
BOF
215 32.99
190
165 49.45
140

142
142
EAF
138

115
128
122

90
65
40
15 28.48 IF
FY16

FY17

FY18

FY19

FY20

FY31P

 India’s steel production capacity has expanded rapidly over the past few years, growing at a CAGR of 3.93% from 122 MT in FY16 to 142 MT in
FY20. The National Steel Policy 2017 has envisaged achieving up to 300 MT of production capacity by 2030-31.
 BF-BOF route is expected to contribute 65% of the capacity, while the remaining 35% is expected to come from EAF & IF routes.

 Expansion of production capacity to 300 MT will translate into additional investment of Rs. 10 lakh crore (US$ 156.08 billion) by 2030-31.

 Steel companies are looking to restart expansion projects on the back of surging steel process with a capacity addition of 29 MT.

Note: P - Projection, BF-BOF - Blast Furnace-Blast Oxygen Furnace, EAF - Electric Arc Furnace, IF - Induction Furnace, MT- million tonnes
Source: Joint Plant Committee, Ministry of Steel, New articles

9
Steel production in India has been growing at a fast pace

Total crude steel production (million tonnes) Total finished steel production (million tonnes)

140.0
120
120.0

126.86
120.14
110.92

108.50
100
103.13 100.0

106.60
97.95

101.03
101.29
89.79

80

102.49
80.0

94.66
60 60.0

40 40.0

20 20.0

0.0
0

FY16

FY17

FY18

FY19

FY20

FY21
FY16

FY17

FY18

FY19

FY20

FY21

 The steel sector contributes over 2% to India’s GDP. Also, it employs 500,000 people directly and 2.50 million indirectly.
 In FY21, production of crude steel and finished steel stood a 102.49 MT and 94.66 MT, respectively.
 To support MSMEs, the government has reduced customs duty on stainless steel to 7.5%.
 In FY20, crude steel production and finished steel production in stood at 108.50 MT and 101.03 MT, respectively.
 According to CARE Ratings, crude steel production is expected to reach 112-114 MT, an increase of 8-9% YoY, in FY22. This demand will be
supported by economic recovery, government spending and enhanced liquidity.
• The Union Budget 2021-22 has a 34.5% YoY increase in allocation for capex at 5.54 lakh crore (US$ 74.60 billion). The budget’s focus is on
creating infrastructure and manufacturing to propel the economy. In addition, enhanced outlays for key sectors such as defence services,
railways, and roads, transport and highways would provide impetus to steel consumption.

Notes: FY - Indian Financial Year (April - March), MT - Million Tonnes

Source: Joint Plant Committee, News Articles, Ministry of Steel, World Steel Association, CARE Ratings

10
Demand has outpaced supply over the last five years

Consumption of finished steel (in million tonnes) Per-capita consumption of steel (in kgs)

120.0 80.00 CAGR 4.12%

70.00

74.10
100.0

68.90
100.01
97.54

65.25
60.00

63.99
61.15
80.0 90.71
84.04
81.52

50.00

93.43
60.0 40.00

40.0 30.00

20.00
20.0
10.00
0.0
0.00
FY16

FY17

FY18

FY19

FY20

FY21

FY15

FY16

FY17

FY18

FY19
 In April 2021, India’s finished steel consumption stood at 6.78 MT. The National Steel Policy aims to increase per capita steel consumption to 160
kgs by 2030-31.

 It is expected that consumption per capita would increase, supported by rapid growth in the industrial sector and rising infra expenditure projects
in railways, roads and highways, etc.

 The government has a fixed objective of increasing rural consumption of steel from the current 19.6 kg/per capita to 38 kg/per capita by 2030-31.

Note: MT - Million Tonnes, kg - kilograms

Source: JPC India Steel, Ministry of Steel, World Steel Association

11
Trends in import and export of steel

 Exports and imports of finished steel stood at 10.79 MT and 4.75 MT, respectively, in FY21. In April 2021, India’s export rose by 121.6% YoY,
compared with 2020. In FY20, India exported 8.24 MT of finished steel.

Import destinations of finished steel from India: Apr-21 vs. Apr-20 Finished steel export and import (in million tonnes)

15% 18% 14
3% 1%
3% 39% 4%
4% 12
Apr-21 4% Apr-20 50%

11.71
6%

10.79
19% 10
17%

9.62
17%

8.24

8.24
Korea China Japan Taiwan Germany Vietnam Others

7.83
7.48
7.22

6.69
Finished steel export source countries to India: Apr-21 vs. Apr-20 6

6.36

4.75
15% 16% 4

4.08
29%

15% 2
Apr-21 Apr-20 20%
57%
6% 0
13%

FY16

FY17

FY18

FY19

FY20

FY21
6% 4%
3%
7% 9%

Begium Italy Turkey Spain Vietnam Hongkong Nepal Others Imports Exports

Note: FY - Indian Financial Year (April - March), MT- million tonnes

Source: Ministry of Steel

12
Key players of the industry

Company Products

Tata Steel Ltd. Finished steel (non-alloy steel)

SAIL Finished steel (non-alloy steel)

JSW Steel Ltd. Hot-rolled coils, strips and sheets

Jindal Steel and Power Ltd. Iron and steel

Welspun-Gujarat Stahl Rohren Ltd. Tubes and pipes

Visa Steel Ltd. Ferro Chrome, coke and special steel

Hot Rolled, Cold Rolled, Galvanized, Colour-Coated

Essar Steel
products, extra wide plates and pipes

Forged Rounds, Rebars, Rounds, Wire Rod coil,

RINL Powergrid TLT Pvt Ltd.
rounds, billets

Source: Sutherland Research

13
Key steel plants in India

Steel integrated plants

under SAIL (Bhilai, Rourkela,
Bokaro, Durgapur and
Burnpur)

Tata Steel’s largest steel

plant, based in Jamshedpur

Alloy and special steel plants

under SAIL (Bhadrawati and RINL steel plant in
Salem); iron and steel plant Vishakhapatnam
at Visvesvaraya

SAIL

Tata Steel

Source: Company website, Sutherland Research

Rastriya Ispat Nigam Limited

14
Steel SEZs in India

Developer Location Product

Tata Steel Special Economic Zone (TSSEZ) Gopalpur, Odisha Steel and allied downstream industries

Source: Formal approvals granted in the Board of Approvals after the SEZ rules coming into force, Special Economic Zones in India website, www.sezindia.nic.in

15
 Recent Trends and Strategies

RECENT TRENDS AND STRATEGIES

16
Notable trends in the Indian steel industry… (1/3)

1
Growing investment
 In June 2021, Mr. T.V. Narendran, the newly elected CII president and MD of Tata Steel, in an interview with The Telegraph, stated that steel
companies have firmed their plans to invest ~Rs. 60,000 crore (US$ 8.09 billion) over the next three years—this is was the biggest private
sector investment plan announced in recent times.
 In April 2021, in a virtual roundtable conference organised by the Indian Chamber of Commerce, Mr. Shin Bongkil, the South Korean
Ambassador to India, announced that POSCO, the South Korean steel giant, is planning to set up an integrated steel plant in Odisha at an
investment of US$ 12 billion, which would make it the country's biggest FDI project.
 In March 2021, Arcelor Mittal Steel signed Rs 50,000 crore deal with Odisha government to setup a steel plant in the state.
 Most of the companies in the industry are undertaking modernisation and expansion of plants to be more cost efficient. E.g. SAIL has
undertaken modernisation and expansion for its 6 plants.
 The production capacity of SAIL is expected to increase from 13 MTPA to 50 MTPA in 2025 with total investment of US$ 24.88 billion.
 On July 02, 2020, ArcelorMittal Group announced plans to invest Rs. 20,000 crore (US$ 2.84 billion) in Gujarat.
 Between April 2000 and Septemeber 2020, Indian metallurgical industries attracted FDI of US$ 14.24 billion.

2
Strategic alliances
 In June 2021, JSW Steel, CSIR-National Chemical Lab (NCL), Scottish Development International (SDI) and India H2 Alliance (IH2A) joined
forces to commercialise hydrogen in steel and cement sectors.
 In May 2021, JSW Steel signed a Memorandum of Understanding (MOU) to conduct a feasibility study with its strategic alliance partner JFE
Steel Corporation to establish a Grain Oriented Electrical Steel Sheet Manufacturing and Sales Joint-Venture Company in India.
 In March 2021, JSW Steel completed its takeover of debt-ridden Bhushan Power and Steel Ltd. This boosted its overall output to 21.5 mtpa.

Notes: MTPA - Million Tonnes Per Annum

Source: Ministry of Steel, News Sources, DPIIT

17
Notable trends in the Indian steel industry… (2/3)

3
Entry of international companies
 Attracted by the growth potential of the Indian steel industry, several global steel players have been planning to enter the market.
 In February 2020, GFG Alliance acquired Adhunik Metaliks and its arm, Zion Steel, for Rs. 425 crore (US$ 60.81 million), marking its entry
into the Indian steel market.
 CarVal Investors, the investment arm of US-based agri group, Cargill, has offered around Rs. 2,000 crore (US$ 277.20 million) along with
Asset Reconstruction Company (India) Ltd. for the purchase of Uttam Value Steels and Uttam Galva Metallics.

4
Increased emphasis on technological innovations
 In the wake of COVID-19 pandemic, Tata Steel has geo-fenced its plant premises to track the movement of employees to track and manage
any COVID-19 cases amongst its employees.
 Companies are attempting coal gasification and gas-based direct-reduced iron (DRI) production. Other alternative technologies such as
Hismelt, Finex and ITmk3 being adopted to produce hot metal.
 Provisional Worldsteel report indicates that the global DRI output stood at 15.31 MT from January to February 2021, up 0.9% over same
period last year, driven by India (6.4 MT, 42% share) at the number one spot.
 The Ministry of Steel has issued necessary direction to the steel companies to frame a strategy for taking up more R&D projects by spending
at least 1% of their sales turnover to facilitate technological innovations in the steel sector.
 The Ministry has established a task force to identify the need for technology development and R&D.
 The Ministry has adopted energy efficiency improvement projects for mills operating with obsolete technologies.
 In January 2021, the Ministry of Steel, signed a Memorandum of Cooperation with the Ministry of Economy, Trade and Industry, Government
of Japan, to boost the steel sector through joint activities under the framework of India–Japan Steel Dialogue.
 In February 2021, Tata Steel BSL collaborated with FarEye, a software logistics firm, to improve its digital transformation process.

Source: Ministry of Steel, News Sources

18
Notable trends in the Indian steel industry… (3/3)

5
Vehicle Scrappage Policy to reduce steel prices
 India is spreading its wings further to foray into another highly potential, yet untapped metal industry.
 The recently announced ‘Vehicle Scrappage Policy’ intends to de-clutter the country of its huge automobile and white goods waste through
recycling.
 This proposed policy seeks to phase out unfit vehicles to reduce vehicular pollution, meet the climate commitments, improve road safety and
fuel efficiency, formalise the vehicle scrapping industry and recover low-cost materials for the automotive, steel and electronics industries.
 Primarily, this new policy aims to boost new vehicles sales, which will stimulate the economy. Automobile manufacturers and the allied
industry will benefit from this policy.
 With the scrapping of old vehicles, raw materials such as plastic, copper, aluminium, steel and rubber will be recycled. This will bring down
the cost component and help the industry become more cost competitive.

6
Steel plants as heroes tackling India’s oxygen scarcity
 Steel plants across the country ramped up supply of essential liquid medical oxygen from 538 metric tonnes per day in April 2021, to >4,000
metric tonnes, with supplies touching 4,435 metric tonnes, as of May 17, 2021.
 In April 2021, India faced a severe shortage of oxygen cylinders for COVID patients.
 It was only a year ago that the central government, for the first time ever, permitted manufacturers of industrial oxygen to produce and sell
gas for medical use. The decision proved to be a life saver during the pandemic.
 Currently, 28 oxygen units located in major public and private sector steel plants are supplying ~1,500 metric tonnes of medical oxygen per
day (MTPD) across the country, as per data by the Ministry of Steel.
 Some steel plants are also filling oxygen cylinders and supplying to the states and hospitals.

Source: News Sources

19
Strategies adopted

CAPACITY EXPANSION
 Companies in the steel industry are investing heavily in expanding their capacity. Major public and private
companies, including Tata Steel, SAIL and JSW Steel, are expanding their production capacity.
 In September 2020, the state-owned steel major SAIL reported doubling of capacity in 5 of its plants. It had
undertaken modernisation and expansion at its steel plants at Bhilai, Bokaro, Rourkela, Durgapur, and
Burnpur. Crude steel capacity has increased from 12.8 million tonnes per annum (MTPA) to 21.4 MTPA.
 A long-term perspective is to achieve capacity of 300 MTPA by 2030 as per National Steel Policy 2017.
1  Tata Steel is expanding the capacity of its Kalinganagar plant from 3 MTPA to 8 MTPA with an estimated
investment of Rs. 23,500 crore (US$ 36.46 billion). The expansion is likely to be completed by 2021 or early
2022. It is expected to improve margins and lead to cost effectiveness. The company is planning to increase
its overall installed capacity to 30 MTPA by 2025 from the current 18.5 MTPA.
 In JSW Steel has undertaken capacity expansion at its Dolvi unit in Maharashtra. It is investing around Rs.
15,000 crore (US$ 2.24 billion) to double the capacity of its plant to 10 MT. The plans have been delayed
due to unavaiability of labour due to COVID-19 lockdowns. The company now expects to finish the
expansion by first half of 2022.
 In May 2021, JSW Steel announced the steel-making expansion at its Vijayanagar plant by 5 MT every year
to 17 MT every year, by the financial year ending March 2024.

EXPANSION THROUGH BROWNFIELD INVESTMENT

2  The steel sector is going through a phase of consolidation and companies operating in the sector are
expected to undertake brownfield investments for expansion.
 In June 2021, Shyam Metalics and Energy Ltd. (SMEL) announced that the company is planning to double
its production capacity at an estimated investment of ~Rs. 2,894 crore (US$ 389.72 million) through
brownfield expansion at two of its units in the next 3-4 years.
 In March 2019, ArcelorMittal was declared as the winning bidder to acquire Essar Steel for a consideration
of Rs. 42,000 crore (US$ 5.82 billion).

Note: GDP - Gross Domestic Product, MTPA - Million tonnes per annum
Source: CCI, Ministry of External Affairs

20
 Growth Drivers

GROWTH DRIVERS

21
Strong demand and policy support driving investments

Growing demand Policy support Increasing investment

Growing demand in Rising investment

the construction 100% FDI in the steel sector from domestic and
industry foreign players

Growing demand in Increasing number of

The Government released

Resulting in
the automotive MoUs signed to boost
Inviting the National Steel Policy
sector investment in steel
2017 and laid down a
As per the Union broad strategy for
Budget 2019-20, the Foreign investment of
encouraging long term
Government’s push nearly US$ 40 billion
growth for the Indian steel
to infrastructure committed in the steel
industry by 2030-31.
sector will increase sector
the demand for steel

Government has also Between April 2000

promoted policy which and March 2020,
Rising demand for
provides a minimum value Indian metallurgical
consumer durables
addition of 15% in notified industries attracted
and capital goods
steel products covered FDI of US$ 13.4
under preferential billion.
procurement

Notes: FDI - Foreign Direct Investment, MOU - Memorandum of Understanding

22
Capital goods, consumer durables and automotive further
driving steel growth

Indian Appliance and Consumer Electronics Industry

Total automobile production in India (million units)
(US$ billion)

CAGR 9.91% 25
21.88
20.71 20.84
25.00 19.76
20 18.05
20.00 15.34
21.18 15
15.00
10

3.79
3.41

3.38
3.29

2.77

2.71
10.00
10.93

1.01
0.86
5

0.81
0.78

0.72

0.57
5.00
0

FY16

FY17

FY18

FY19

FY20

FY21
0.00
2018 2025F
Passenger Vehicles Commercial Vehicles Two & Three Wheelers

 Between 2018-25F, the appliance and consumer electronics (ACE) sector will expand at a CAGR of 9.91%, contributing to the growth of the steel
industry.

 Growth in automobile production is also expected to augment growth in steel production. Automobile production in India stood at 18.6 million units
in FY21. According to ICRA, the Indian passenger vehicle (PV) industry is expected to post a growth of 22-25% in FY22.

 In March 2021, India Ratings and Research (Ind-Ra) revised the outlook for the auto sector to 'improving for FY22' from negative, backed by
likely revival across segments, positive consumer sentiments amid macroeconomic tailwinds after recovering from the COVID-19 pandemic.
The rating agency expects auto volumes to increase by 16-20% YoY in FY22 after recording a decline of ~14% YoY in FY21.

 Gross Value Added (GVA) of the construction industry at current prices increased at a CAGR of 8.4% between FY16 and FY20. Since
construction industry is a major consumer of steel, expansion across construction industry will translate into growth of steel sector.

Notes: F- Forecast, FY - Indian Financial Year (April - March), *Provisional Estimates of National Income, * - As per 2nd advanced estimate
Source: SIAM, PwC, CEAMA

23
Policy support aiding growth in the steel sector… (1/2)
Steel Clusters

 In September 2020, the Ministry of Steel prepared a draft framework policy for development of steel clusters in the country.
 The draft framework policy is aimed at facilitating and establishing greenfield steel clusters, along with development and expansion of the
existing steel clusters.

National Steel Policy 2017

 New National Steel Policy was formulated by the Ministry of Steel in 2016 to retain the objectives included in National Steel Policy (NSP)
2005. It aimed at covering broader aspects of steel sector across the country including environment and facilitation of new steel projects,
growth of steel demand in India and raw materials
 Under the policy, the central Government stated that all the Government tenders will give preference to domestically manufactured steel and
iron products. Moreover, Indian steel makers importing intermediate products or raw materials can claim benefits of domestic procurement
provision by adding minimum of 15% value to the product.
 The National steel policy, 2017 aspired to achieve 300MT of steel making capacity by 2030-31. This would translate into additional
investments of Rs. 10 lakh crore (US$ 156.08 billion).
 Further, it aimed to increase per capita steel consumption to 160 kgs by 2030-31.

R&D and innovation

 The scheme for the promotion of R&D in iron and steel sector has been continued under the 14th Finance Commission (FY20). Under the
scheme, 26 projects have been approved with financial assistance of Rs. 161 crore (US$ 24.98 million) from the Ministry of Steel.
 Ministry of Steel is setting up industry driven institutional mechanism - Steel Research & Technology Mission of India (SRTMI) - with an
initial corpus of US$ 30.89 million. The institute will facilitate joint collaborative research projects in the sector.
 In December 2020, the Minister for Petroleum & Natural Gas and Steel, Mr. Dharmendra Pradhan, has appealed to the scientific community
to Innovate for India (I4I) and create competitive advantages to make India ‘Aatmanirbhar’.

FDI
 100% FDI through the automatic route is allowed in the Indian steel sector.

Rise in export duty

 The Government hiked the export duty on iron ore to 50% ad valorem on all varieties of iron ore (except pellets).
Note: MT - Million tonnes
Source: Ministry of Steel, Press Information Bureau

24
Policy support aiding growth in the steel sector… (2/2)
Duty drawback benefits
 In October 2020, Directorate General of Foreign Trade announced that steel manufacturers in the country can avail duty drawback benefits
on steel supplied through their service centres, distributors, dealers and stock yards

Push due to Make in India initiative

 Going forward, the Make in India initiative and policy decisions taken under it are expected to augment the country’s steel production
capacity and resolve issues related to the mining industry.

Reduction in custom duty on plants and equipment

 The Government has reduced the basic custom duty on the plants and equipment required for initial set up or expansion of iron ore pellets
plants and iron ore beneficiation plants from 7.5/5% to 2.5% .
 Customs duty on imported flat-rolled stainless-steel products has been increased to 15% from 7.5% .
 Basic customs duty on steel grade dolomite and steel grade limestone is being reduced from 5% to 2.5% . Basic customs duty is being
reduced from 10% to 5% on forged steel rings used in the manufacture of bearings of wind-operated electricity generators.

Production-linked Incentive (PLI) Scheme

 In November 2020, Union Cabinet approved the production-linked incentive (PLI) scheme in 10 key sectors (including electronics and white
goods) to boost India’s manufacturing capabilities and exports and promote the ‘Atmanirbhar Bharat’ initiative.
 India is a net exporter of finished steel and has the potential to become a frontrunner in certain grades of steel. PLI scheme has bee
approved for specialty steel with a financial outlay of Rs. 6,322 crore (US$ 858.50 million) over a five-year period

Steel sector boosting in Eastern India

 In June 2021, Minister of Steel & Petroleum and Natural Gas Mr. Dharmendra Pradhan addressed the webinar on ‘Making Eastern India a
manufacturing hub with respect to metallurgical industries’, organised by the Indian Institute of Metals.
 In 2020, ‘Mission Purvodaya’ was launched to accelerate development of the eastern states of India ((Odisha, Jharkhand, Chhattisgarh,
West Bengal and the northern part of Andhra Pradesh) through establishment of an integrated steel hub in Kolkata, West Bengal. Eastern
India has the potential to add >75% of the country’s incremental steel capacity. It is expected that of the 300 MT capacity by 2030-31, >200
MT can come from this region alone, driven by Industry 4.0.
 The Ministry of Steel plans to invest US$ 70 billion in the eastern region of the country.

Source: The Economic Times, Ministry of Steel, Business Standard, Make In India

25
The sector witnessed rising investments in the last decade
Date announced Acquirer name Target name Value of deal (US$ million)
Uttam Galva Metallics Limited (UGML)
Jan-21 Nithia Capital and CarVal Investors 273.00
and Uttam Value Steel Limited (UVSL)
Oct-20 JSW Steel Ltd. Asian Colour Coated Ispat 211.89
Mar-20 Arcelor Mittal Nippon Steel India Bhander Power plant -
Feb-20 JSW Steel Ltd. Bhushan Power and Steel 2,818.72
Mar-19 ArcelorMittal Essar steel 5,821.21
Sep-18 Tata Steel Usha Martin Ltd (Specialty Steel Business) 641.41-701.07
Aug-18 Nippon Steel and Sumitomo Metal Corp. Sanyo Special Steel Co Ltd. -
Jul-18 Aion Investments-JSW Steel Monnet Ispat and Energy 428.85
Jul-18 Liberty House Adhunik Metals 58.42
Jun-18 Vedanta Star Ltd. Electrosteel Steels 825.45
May-18 Tata Steel Ltd. Bhushan Steel 5,461.60
Dec-17 Tata Steel Ltd. Bhubaneshwar Power 39.5
Jan-17 Tata Steel Ltd. Creative Port Development Pvt Ltd. -
Aug-16 JSW Steel Ltd. Praxair Oxygen Pvt. Ltd. 36
Aug-16 Kirloskar Ferrous Industries Ltd. VSL Steels Ltd. 23.68
Aug-14 JSW Steel Ltd. Welspun Maxsteel Ltd. 165.85
Apr-14 JSW Steel Ltd. Vallabh Tinplate Pvt Ltd. 7.63
Mar-14 Lalitanjali Group Pvt Ltd. Centom Industries Ltd. -
Dec-13 Venus Insec Pvt Ltd. Goodluck Steel Tubes Ltd. 23.73

Cumulative FDI Inflows

Period: From April 2000 to March 2021
Sector
Metallurgical industries US$ 14.74 billion
Source: Thomson ONE Banker, Department for Promotion of Industry and Internal Trade (DPIIT). News Articles

26
 Opportunities

OPPORTUNITIES

27
Opportunities… (1/2)

Automotive Capital goods Infrastructure Airports

 The automotive industry is  The capital goods sector  The infrastructure sector  More and more modern and
forecast to reach US$ 260- accounts for 11% of the accounts for 9% of steel private airports are
300 billion by 2026. total steel consumption consumption and is expected to expected to be set up.
and is expected to increase to 11% by 2025-26.
 The industry accounts for  In FY19, passenger traffic at
increase 14-15% by
around 10% of the demand  Due to rising investment in Indian airports stood at
2025-26. It has the
for steel in India. infrastructure the demand for 344.69 million.
potential to increase in
steel products would increase in
 With increasing capacity tonnage and market  The number of operational
the years ahead.
addition in the automotive share. airports stood at 103 as on
industry, demand for steel  70% of the country’s 31 March 2019.
 Corporate India’s capex
from the sector is expected infrastructure, estimated at Rs. 6
is expected to grow and  Development of tier II city
to be robust. lakh crore (US$ 89.50 billion), is
generate greater airports will sustain
yet to come up. Thus, a
demand for steel. consumption growth.
significant growth potential for
steel sector is present.*  Estimated steel
consumption in constructing
 For various infrastructure
airports is likely to grow
sectors, including real estate and
more than 20% over the
power, the Ministry of Finance
next few years.
planning to set up a stress fund.

 The Government of India has allocated Rs. 111 lakh crore (US$1.4 trillion) under the National Infrastructure Pipeline (NIP) for FY2019-25. Sectors
such as energy (24%), roads (18%), urban (17%) and railways (12%) account for ~71% of the projected infrastructure investments in India.

Note: Capex - Capital Expenditure, P - Provisional, *According to Mr. Chaudhary Birender Singh, Minister of Steel
Source: Make In India, SIAM, Ministry of Steel, Airport Authority of India

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Opportunities… (2/2)

Railways Oil and gas Power Rural India

 The Dedicated Rail Freight  India’s primary energy  The Government has  Rural India is expected to
Corridor (DRFC) network consumption of oil and gas envisaged capacity addition reach per capita
expansion would be
is expected to increase to of 58,384 MW from consumption of 12-14 kgs of
enhanced in the future.
10 mbpd and 14 bcfd, conventional sources finished steel by 2020.
 Introduction of high-speed respectively, by 2040. between 2017-22*. Also, the
bullet trains and metro  Policies like Pradhan Mantri
Government is targeting to
trains will increase steel  This would lead to an Awa Yojana and Pradhan
usage. achieve 175 GW of
increase in demand of steel Mantri Gram Sadak Yojana
renewable power
 Gauge conversion, setting tubes and pipes, providing a are driving growing demand
up of new lines and generation capacity by
lucrative opportunity for the for steel in rural India.
electrification would drive 2022.
steel industry.
demand for steel.  In FY19, per capita
 This will lead to
 The Indian Railways is consumption of steel in rural
enhancement in both
planning to procure over 11 India was estimated to be
transmission and
lakh tons of steel from the between 10-15 kgs.
Steel Authority of India distribution capabilities,
Limited (SAIL) for track thereby raising steel
renewal and laying new demand from the sector.
lines across the country.

Note: RE - Revised Estimates, mbpd - million barrels per day, bcfd - billion cubic feet per day, *National Electricity Plan 2018
Source: Make In India, Ministry of Power

29
Key Industry Contacts

30
Key industry contacts

Agency Contact Information

207-208, 2nd Floor, Kailash Building,

26 K. G. Marg, New Delhi - 110 001,
Phone: 011 - 42668800
Indian Steel Association
Fax: 011 – 42668805
E-mail: info@indsteel.org
Website: www.indsteel.org

Udyog Bhavan
New Delhi - 110011
Fax : 91-11-23063236
Ministry of Steel
Phone : 91-11-23063417
Email: sharma.aman@nic.in
Website: www.steel.gov.in

Khanij Bhavan, Masab Tank,

Hyderabad - 500028
National Mineral Development
Fax: 91-235338711
Corporation
Phone: 040-23538713-21
Website: www.nmdc.co.in/

L-22/4, DLF Phase-II

Gurgaon, Haryana -122 002
Indian Stainless-Steel
Phone: 91-124-4375501
Development Association
Fax: 91-124-4375509
Website: www.stainlessindia.org/

31
Appendix

32
Glossary

 CAGR: Compound Annual Growth Rate

 FDI: Foreign Direct Investment

 FY: Indian Financial Year (April to March)

• So FY10 implies April 2009 to March 2010

 JV: Joint Venture

 MoU: Memorandum of Understanding

 MT: Million Tonnes

 MTPA: Million Tonnes Per Annum

 NPAT: Net Profit After Tax

 SEZ: Special Economic Zone

 TMT: Thermo Mechanically Treated

 US$ : US Dollar

 Wherever applicable, numbers have been rounded off to the nearest whole number

33
Exchange rates

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year Rs. Equivalent of one US$ Year Rs. Equivalent of one US$
2004-05 44.95 2005 44.11

2005-06 44.28 2006 45.33

2006-07 45.29 2007 41.29
2007-08 40.24 2008 43.42
2008-09 45.91 2009 48.35
2009-10 47.42 2010 45.74
2010-11 45.58 2011 46.67
2011-12 47.95 2012 53.49
2012-13 54.45 2013 58.63
2013-14 60.50 2014 61.03
2014-15 61.15 2015 64.15
2015-16 65.46 2016 67.21
2016-17 67.09 2017 65.12
2017-18 64.45 2018 68.36
2018-19 69.89 2019 69.89
2019-20 70.49 2020 74.18
2020-21 73.20 2021* 72.68

Note: As of June 2021

Source: Reserve Bank of India, Average for the year

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