India slipped two positions in 2010 to emerge as the world’s fifth-largest steel producer, as a moderate single digit growth could not keep pace with the substantial revival in steel production in developed economies like the US and Russia.
India produced 66.8 million tonnes of steel last year, 6.4% more than 2009, but was well outpaced by the growth in other parts of the world. Its growth was the lowest among countries with a minimum 10 million tonnes per annum (mtpa) production capacity. Global steel production during the year grew by 15% to 1,414 mtpa, only the second time in a year when it has grown in double digits and rebounding from the decline witnessed in 2008 and 2009.
India was the world’s third-largest steel producer in 2009, largely due to recession in the US and Russia. However, few would have expected 2010 to be the country’s worst show in 6 years. The last time India’s steel production had grown by a lesser quantum was in 2004. (2.7%)
“In the recent past we have been growing at a decent pace. In 2010 it may have slackened as we have not been able to fast froward capacity expansion,” said Anjani Agarwal, partner and national leader, metals and mining, Ernst & Young.
It was also the first time since 2006 that India’s growth lagged overall growth in world steel production. Experts blame sluggishness in capacity expansion for the low growth rate. Investments worth R11 lakh crore across 222 greenfield projects are stuck on issues ranging from environmental clearances to land acquisition. “The country with its large population needs investments to generate income and ensure development,” said Beni Prasad Verma, steel minister. “A steel plant is a good mechanism for doing this as it brings development around the area where it is set up.”
Even then, for the full decade, India emerged as one of the fastest-growing countries with a compounded annual growth rate (CAGR) of 9.9%, way ahead of the world average of 5.4%. Low per capita steel consumption at 46 kg against the world average of over 200 kg, means it also remains one of the biggest potential markets for steel.