The biggest threat posed to the Indian Steel Industry, at least in terms of green-field growth are Land acquisition, mine allocation and environment clearance. While some brown-field additions to capacity have taken place in SAIL and Jindal plants, the overall growth scenario has almost come to a standstill.
As a matter of fact production of steel has even failed to keep up with the consumption increasing India’s reliance on imports, not a very healthy sign of the times. This is in complete contrast with the feel good early years of the decade when everyone from Posco to the Mittals were declaring their intentions to set up projects in India. Naturally, guesses about what will be India’s steelmaking capacity in the year 2020 were literally going through the roof.
Today, not even a decade away from that magic year, things are really gloomy to put things mildly. Acquiring huge tracts of land required for these mega projects has become a bone of contention. Mired in controversies, vital linkages to captive coal and iron ore have been put on hold, while a vigilant and proactive environment ministry has ensured that things cannot be taken for granted, especially the environment.
Caught in this mousetrap, the industry is literally gasping for breath as delays mean huge cost escalations, restructuring of the financial models, renegotiations with the lending institutions before financial closures can be had. As a matter of fact, this inordinate delay is sure to make some projects even unviable leading to the scrapping of plans that once looked grand.
Production and consumption of steel is one of the most important indicators of a economy’s well being and on both fronts India lags woefully behind. The current situation will only go to worsen things. This will also mean that the economy will miss the influx of capital in the core sector leading to the generation of income and wealth by the ripple effect.