iron & steel sector in india
TRANSCRIPT
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Iron & Steel Sector in India
T&A Consulting 1400 A, Devika Towers,
6 - Nehru Place,
New Delhi 110019, India
www.insideindiatrade.com
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Political Map of India
India is a federal union comprising twenty-nine states and seven union territories. The states and
union territories are further subdivided into districts and further into smaller administrative divisions
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List of Abbreviations
Acronym Description
BIS Bureau of Indian Standards
CAGR Compound Annual Growth Rate
CVD Countervailing Duty
DGAD Directorate General of Anti-Dumping
DGFT Directorate General of Foreign Trade
DIPP Department of Industrial Policy and Promotion
DRI Direct Reduced Iron
ESL Electro Steels Ltd
FDI Foreign Direct Investment
FICCI Federation of Indian Chambers of Commerce and Industry
FY Financial Year/ Fiscal Year
GDP Gross Domestic Product
GI Galvanized Iron
HS Harmonized System
HSL Hindustan Steel Ltd
IEC Importer Exporter Codes
IISCO Indian Iron and Steel Co. Ltd
INR Indian National Rupee
ISMB Indian Standard Medium Weight Beams
ISMC Indian Standard Medium Channel
MIP Minimum Import Price
MS Mild Steel
MT Million Metric Tonne
NSIC National Small Industries Corporation
PAN Permanent Account Numbers
RHS Rectangular Hollow Structure
RINL Rashtriya Ispat Nigam Ltd
SAD Special Additional Duty
SAIL Steel Authority of India Ltd
SHS Square Hollow Structure
SPOC Single Point of Contact
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SSICs State Small Scale Industries Corporations
TISCO Tata Iron and Steel Co. Ltd
TMT Thermo Mechanically Treated
UK United Kingdom
USA United States of America
USD United States Dollar
USSR Union of Soviet Socialist Republics
VISL Visvesvaraya Iron and Steel
YoY Year on Year
Currency Conversion Rate: 1 USD= 65 INR
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Executive Summary
The primary objective of the report is to provide an overview of the Indian Iron & Steel sector. The
research study is geared to highlight opportunities for Brazilian companies looking to enter India as a
target market.
The report highlights the following key points:
• Market size estimation and growth rate
• Key sub-segments of the sector
• Market Trends of the industry
• Competitive landscape in the industry
• Export import trends in the sector
• Brief Regulatory Framework
• Opportunity assessment for Brazilian companies in India
India has the distinction of being the largest producer of sponge iron, the 3rd largest producer of
crude steel, and the 3rd largest consumer of finished steel in the world. Also, India being one of the
fastest growing developing countries in the world, consumption of steel in sectors like infrastructure
and automobiles is very high, and often the domestic players are not able the meet the demands of
the market. India has been a net importer of steel for a long while, barring a brief period in 2013-14,
when exports outstripped imports marginally after a period of six years. The government of India's
efforts to improve the country's infrastructure and to turn India into a manufacturing hub for the
world, through the "Make in India” campaign is expected to expand the production capacity of the
sector in India.
India’s finished steel production is estimated at 90.98 MT (Million Metric Tonne) in 2015-16.
Although the top few domestic players in the industry hold a significant share in the total output of
finished steel in India, the smaller players together account for majority of the contribution.
Furthermore, the private sector players contribute over 80% of the total finished steel production in
India.
Foreign players over the years have had limited manufacturing presence in the Indian iron and steel
sector due to various regulatory barriers. However, with the relaxation of the FDI (Foreign Direct
Investment) limit in the sector to 100% subject to certain conditions, the industry has started seeing
investments from foreign companies. Nevertheless, the primary mode of engagement with the Indian
market continues to be via exports.
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Understanding of Brazil’s Iron & Steel Industry
The steel industry in Brazil is the biggest in South America, accounting for over 52% of the
continent’s total output of steel. With over 30 million tonnes of annual output, the Brazilian steel
industry is also the eighth biggest in the world, contributing around 2% of the total global output.
The Brazilian iron and steel sector is primarily dominated by eleven business groups, namely,
Aperam, ArcelorMittal Brasil, CSN, Gerdau, SINOBRAS, Thyssenkrupp CSA, Usiminas, VSB Tubos, V &
M do Brasil, Villares Metals, and Votorantim.
The industry on the whole in Brazil has been in decline for the last few years. Since the performance
of the industry is inextricably linked to the health of the economy, the recession in Brazil has taken a
toll on the iron and steel industry. The economic slowdown has significantly diminished the activity
of the steel-intensive industries in the country, thereby drastically reducing the domestic demand
for steel. The Brazilian steel industry is currently believed to be operating at about 60% of its
production capacity.
However, the scenario is a lot better on the exports side. Brazil has traditionally had a trade surplus
for iron and steel. And quite interestingly, this is a trend that has continued despite the drop in
domestic demand for steel. In 2015, Brazil’s steel exports increased to 13.7 MT, recording an annual
growth of over 40% or 4 MT, despite the shrinkage of the domestic market. The biggest markets for
Brazilian iron and steel are USA, Netherlands, China, Turkey, Argentina, Germany, Japan, Peru, Italy
Mexico, and Singapore.
With India being a traditional net importer of steel and Brazil being one the biggest net exporters of
steel in the world, natural synergies can be derived between the two nations through trade. The
demand for iron and steel in India has increased significantly in the last couple of decades, with the
steel consuming industries like infrastructure, construction, automobiles having to keep pace with
the needs of a growing economy like India. This could be a win-win situation for both countries,
considering the demand-supply gaps in both Brazil and India.
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Table of Contents
1.0 Overview- Indian Iron and Steel Industry ....................................................................... 8
1.1 Market Segmentation and Market Share Analysis ........................................................ 11
1.2 Market Size and Growth Rate ........................................................................................ 12
1.3 Major Industry Trends /Key Drivers ............................................................................... 15
2.0 Competition Analysis ............................................................................................................ 18
2.1 Indian Players in the Iron & Steel Industry .................................................................... 18
2.2 Foreign Players in the Indian Iron and Steel Industry .............................................. 24
2.3 Current Status-Import Dependence ............................................................................... 26
3.0 Regulatory Framework & Import Policy ....................................................................... 27
3.1 Import Policy, Regulations & Procedure ........................................................................ 28
3.2 Import and Export Trends .............................................................................................. 30
3.3 Import tariffs & Duties, Antidumping duty (if any) ........................................................ 33
4.0 Opportunities for Brazilian Products ............................................................................. 35
4.1 Opportunity Assessment Table ...................................................................................... 36
5.0 Potential Distributor Mapping .......................................................................................... 38
6.0 Key Influencers ....................................................................................................................... 41
7.0 Major Trade Events ............................................................................................................... 43
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1.0 Overview of
Iron & Steel Industry
in India
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1.0 Overview- Indian Iron and Steel Industry
The iron and steel industry is essential to the sustenance and growth of any modern economy, to the
extent that per capita consumption of steel is treated as an important metric of the economic health
and growth of a nation. With India being one of the fastest growing economies in the world, the iron
and industry has become one of the most important sectors in the country.
India has the distinction of being the largest producer of sponge iron, the 3rd largest producer of
crude steel, and the 3rd largest consumer of finished steel in the world. The iron and steel industry
in aggregate accounts for around 2% of India’s GDP (Gross Domestic Product).
The steel sector employs over 600, 000 people in India. Further, the per capita consumption of total
finished steel in the country has risen from 51 kg in 2009-10 to over 60 kg in 2015-16.
India holds a prominent position in the global iron and steel landscape, with the establishment of
new state-of-the-art steel mills, modernization of older plants, induction of energy-efficient
technologies and backward integration with global raw material sources. While the steel industry
derives most of its demand from important sectors like infrastructure, aviation, engineering,
construction, and automobiles, special steels are increasingly being used in engineering industries
such as power generation, petrochemicals, and fertilizers.
India’s steel industry has come of age since the country’s liberation seven decades ago. Possessing a
small but viable steel capacity of around 1.3 MT per annum at the time of Independence, India
overtook the USA last year to become the third largest producer of crude steel after China and
Japan, according to data compiled by the World Steel Association.
As in many sectors, commercial production of iron and steel took off during the pre-Independence
era with the Tata group setting up the Tata Iron and Steel Co. Ltd (TISCO) in 1907. Next came the
Indian Iron and Steel Co. Ltd (IISCO) in 1918 followed by Mysore Wood Distillation and Iron Works
that started operations at the same time.
After Independence, the government focused on all core industries, including iron and steel, thus
leading to increased public sector investments, enhanced production, and new manufacturing units.
In 1953, agreements were signed to set up the first integrated public sector steel plant (with a
capacity of 1 MT per annum) at Rourkela in Odisha with collaboration from the erstwhile West
Germany. Three years later, two more pacts were signed for setting up steel plants at Bhilai (with
assistance from the erstwhile USSR) and Durgapur (with collaboration from the UK) having similar
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capacity. A new plant at Bokaro, with a capacity of 2.5 MT per annum, went into production in 1973-
74 while another facility at Salem in Tamil Nadu went live in 1972. The government also set up
Hindustan Steel Ltd (HSL) for the supervision and management of these facilities. Also, with capacity
augmentation happening across these plants in phases, the total crude steel production capacity of
HSL rose to 3.7 MT in 1968-69 and subsequently to 4 MT in 1972-73.
But there was more in terms of quality and capacity building. India’s first coastal public sector
integrated steel plant, Rashtriya Ispat Nigam Ltd, or RINL (also known as Visakhapatnam Steel Plant),
came up in August 1992. It had a capacity to produce 3 MT of liquid steel per annum, which is
currently being expanded to 6.3 MT per annum.
Keeping in mind the complexity of a fast-expanding infrastructure sector, the then-ministry of steel
and mines formed the Steel Authority of India Ltd (SAIL) in 1973 as the holding company to manage
the industry. SAIL was made responsible for managing the five integrated steel plants at Rourkela,
Bhilai, Durgapur, Bokaro and Burnpur, as well as three special plants—Alloy Steels Plant in Durgapur,
Salem Steel Plant and VISL (Visvesvaraya Iron and Steel). In 1978, SAIL was restructured as an
operating company.
With liberalization came the dismantling of the licensing regime, and iron and steel got taken off the
list of industries reserved for state-owned firms. The benefits were many. Compulsory licensing was
scrapped, prices were progressively deregulated, foreign investment up to 74% was allowed, and
import duty on capital goods was lowered.
This paved the way for private entities finally entering a heavily controlled industry segment. Among
these, the most significant are JSW Steel Ltd, Essar Steel Ltd, Jindal Steel and Power Ltd (JSPL),
Bhushan Steel Ltd, Electrosteel Steels Ltd (ESL) and Usha Martin Ltd. While the new companies
courted cost-effective, state-of-the-art technologies from the very start, the state-run companies
opted for modernization and expansion as well.
Beginning 1991-92, production rose from 14.33 MT to 21.4 MT by 1995-96 and to 29.27 MT by 2000-
01. The industry entered a new development stage back in 2007-08, riding high on a resurgent
economy and a rising demand for steel. The Government of India now permits 100% FDI in the steel
sector under automatic rule subject to certain conditions, after which the sector has witnessed
interest and investments from foreign players.
Source: VC Circle Edge (www.vccircle.com)
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1.1 Market Segmentation and Market Share Analysis
The iron and steel industry is one of the biggest and most diverse industrial sectors in the country.
The iron industry in India can be thought of as a separate industry and bifurcated into the pig iron
section, and the sponge iron section, the two biggest contributors to the iron industry. The steel
industry, on the other hand, has a far more complex structure. One way to segment the Indian steel
industry would be by composition, and by form. The detailed segmentation of the iron and steel
industry has been laid out below1.
1 Source: T&A Research: The data is gathered from multiple data sources including Indian Government data banks, sectoral journals, National daily newspapers, industry association publications and international market research portals. In addition, primary interview responses are also taken into consideration.
Liquid
Steel
Crude
Steel
Finished
Steel
Alloy
Steel
Non-alloy
Steel
Ingots
Semis
Flat
Non-flat
Stainless
Silicon
Electrical
Low
Carbon
Steel
Medium
Carbon
Steel
High
Speed
High
Carbon
Steel
Composition
Iron and Steel Industry
Form
Pig Iron
Steel
Sponge
Iron
Steel
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66.471 73.5 74.1
76.9981.52
0
10
20
30
40
50
60
70
80
90
FY11 FY12 FY13 FY14 FY15 FY16
Mill
ion
To
nn
es
Consumption of Finished Steel
68.6275.7
81.6887.67
92.16 90.98
0
10
20
30
40
50
60
70
80
90
100
FY 11 FY 12 FY 13 FY 14 FY 15 FY 16
Mill
ion
To
nn
es
Production of Finished Steel in India
1.2 Market Size and Growth Rate
Category Installed Capacity in 2015-16 (MT)
Pig Iron 9.23
Sponge Iron 14.53
Total Finished Steel 90.98
Source: Joint Plant Committee, Government of India
Finished Steel
The finished steel production in India has
grown at a steady CAGR of around 5.8%
over FY211 to FY15. However due to the
global slowdown in the steel industry,
India’s finished steel production declined
by 1.3% to 90.98 MT in 2015-16 from
92.16 MT in 2014-15.
: Source: Joint Plant Committee, Government of India
The consumption of finished steel in
India stood at 81.52 MT in 2015-16, an
improvement of around 5.9% from 76.99
MT in 2014-15. The per capita
consumption of steel, currently
estimated at 63 kg, also grew by around
3.2% in 2015-16. This trend is likely to
continue given the current government’s
thrust on developing the manufacturing
and infrastructure sectors in the country
through investments and policy reforms.
Source: Joint Plant Committee, Government of India
2 FY- Financial Year or Fiscal year is the period starting from 1st April 20xx to 31st March 20xx+1 (For Instance 1st April 2016
to 31st March 2017)
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Non-alloy steels make up the bulk of the total finished steel production in India. In 2014-15 around
83 MT (over 90% of the total finished steel produced) of non-alloy steel was made in the country.
Source: Joint Plant Committee, Ministry of Steel, Government of India
Flat and non-flat steels make even contributions to the total finished steel production in India. In
2014-15, around 43 MT of flat finished steel, and over 40 MT of non-flat steel was produced in India.
In terms of end user industry, consumption of steel in India is led by the construction sector, the
infrastructure industry, and the automobile industry.
Source: Joint Plant Committee, Ministry of Steel, Government of India
83.6
8.5
Finished Steel Production in 2014-15 by Composition
Non-alloy Alloy
Construction, 35%
Infrastructure, 20%
Capital Goods, 8%
Automobiles, 12%
Pipes and Tubes, 10%
Others, 15%
Steel Consumption by End Use in India
Construction
Infrastructure
Capital Goods
Automobiles
Pipes and Tubes
Others
43
40.5
Finished Steel Production in 2014-15 by Form
Flat Non-flat
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Sponge Iron
The production of sponge iron or direct reduced iron (DRI) has been affected more severely by the
global slowdown. The production for sale of sponge iron in India dropped by around 29% in 2015-16
to 14.53 MT from 20.38 MT in 2014-15. Nevertheless, India has continued to be the biggest sponge
iron producer in the world since 2003. DRI production for sale in India has undergone a steep growth
over the last couple of decades from 1.31 MT in 1991-92 to 20.38 MT in 2014-15.
Source: Joint Plant Committee, Ministry of Steel, Government of India
Pig Iron
The production of pig iron in India has grown at a CAGR of more than 10% over the last five years,
despite a slight decline of around 5% in 2015-16. The production of pig iron has increased multi-fold
from 1.59 MT in 1991-92 to 9.70 MT in 2015.
Source: Joint Plant Committee, Ministry of Steel, Government of India
25.08
19.63
14.33
18.220.38
14.53
0
5
10
15
20
25
30
An
nu
al S
po
nge
Iro
n P
rod
uct
ion
(in
m
illio
n t
on
nes
)
Sponge Iron Production in India
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
5.68 5.371
6.87
7.95
9.6949.23
0
2
4
6
8
10
12
Pig
Iro
n P
rod
uct
ion
(in
mill
ion
to
nn
es)
Pig Iron Production in India
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
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1.3 Major Industry Trends
The iron and steel sector in India, despite the global slowdown in the industry, has performed very
well in recent months, with major steel companies posting record production numbers. A surge in
demand for Indian engineering products from key markets like China, Spain, Belgium has played an
important role in reversing the downward trend in the industry in FY16. Furthermore, China’s
commitment to reducing its production capacity by 150 MT by 2020 is creating great opportunities
for major steel producing countries like India. Quite interestingly, Indian iron and steel exports to
China have recorded a YoY (Year on Year) growth of over 80% from USD 22 million in FY32016 to USD
41 million in FY4 2017.
Domestic Consumption
• The iron and steel industry in India has been buoyed in the last few months due to the
growth of the domestic consumer products industries.
• The automobile industry, one of the key contributors to the health of the iron and steel
industry of any country, is one of the biggest industries in India churning out around 24
million vehicles annually
Foreign Demand
• China's decision to cut back on its steel production and exports has been a boon for its
competitors, as China accounted for the bulk of the global trade in steel. This opens up
opportunities for other countries like India to increase their production and exports to new
markets.
• A renewal in demand for Indian engineering products in some key export markets has also
boosted the iron and steel industry in India.
Policy Support
• The government's decision to allow 100% FDI subject to certain conditions, in the in the iron
and steel sector has led to an influx of foreign capital into the industry.
3 FY- Financial Year or Fiscal year is the period starting from 1st April 20xx to 31st March 20xx 4 FY- Financial Year or Fiscal year is the period starting from 1st April 20xx to 31st March 20xx
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• The government of India's efforts to improve the country's infrastructure and to turn India
into a manufacturing hub for the world, through the "Make in India" campaign has also led
to greater domestic demand for iron and steel products in India.
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•
2.0 Competitive Analysis
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2.0 Competitive Analysis
2.1 Indian Players in the Iron & Steel Industry
Most of the players in the Indian iron and steel industry can be classified by mode/scale of operation
into integrated producers and secondary producers.
The secondary producers operate mini steel plants, which are smaller plants with electric furnaces.
Their product portfolio varies depending on their specialization, which may include sponge iron, pig
iron and steel. The secondary producers make mild and alloy steel of certain specifications. There
are over 650 mini steel plants in India.
Integrated steel plants, on the other hand are large scale operations that handle everything in one
complex including sponge iron, pig iron and steel. There are three major integrated steel players in
India, viz. Tata Iron and Steel Company Limited (TISCO), Rashtriya Ispat Nigam Limited (RINL) and
Steel Authority of India Limited (SAIL).
Although the top few players in the industry hold a significant share in the total output of finished
steel in India, the smaller players together account for the biggest contribution. Furthermore, the
private sector players contribute over 80% of the total finished steel production in India.
Source: Joint Plant Committee, Ministry of Steel, Government of India
Tata Steel, 8.9%
RINL, 2.5%
SAIL, 10.2%
Other Private Sector Players, 70%
Share of Finished Steel Production (2014-15)
Tata Steel
RINL
SAIL
Other Private Sector Players
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Top Manufacturers of Sponge Iron and Pig Iron
Company Website Corporate Office & Plants
Visa Steel Ltd
www.visasteel.com
Corporate Office: Kolkata
Project Locations:
Golagaon (Odisha), Raigarh
(Chhattisgarh),
Kalinganagar (Odisha)
Kirloskar Ferrous Industries
www.kfil.com
Corporate Office: Mumbai
Project Locations:
Solapur (Maharashtra), Koppal
(Karnataka)
Tata Metaliks
www.tatametaliks.com
Corporate Office: Kolkata
Project Locations:
Kharagpur (West Bengal)
Jai Balaji Group www.jaibalajigroup.com
Corporate Office: Kolkata
Project Locations:
Durg (Chhattisgarh), Durgapur
(West Bengal), Raniganj (West
Bengal), Rourkela (Odisha)
Nova Iron and Steel
www.novaironsteel.com
Corporate Office: New Delhi
Project Locations:
Dagori (Chhattisgarh)
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Essar Steel
www.essar.com
Corporate Office: Mumbai
Project Locations:
Hazira (Gujarat)
SPS Group www.spsgroup.co.in
Corporate Office: Kolkata
Project Locations:
Bilaspur (Himachal Pradesh),
Durgapur (West Bengal),
Monnet Ispat
www.monnetgroup.com
Corporate Office: New Delhi
Project Locations:
Raipur (Chhattisgarh), Raigarh
(Chhattisgarh), Malibrahmani
(Odisha)
Jindal Steel and Power Ltd
www.jindalsteelpower.com
Corporate Office: New Delhi
Project Locations:
Raigarh (Chhattisgarh)
Tata Sponge
www.tatasponge.com
Corporate office: Bilaipada
Project Locations:
Bilaipada (Odisha)
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Top Indian Iron and Steel Producers in India
Company Website Corporate Office & Plants
Tata Steel
www.tatasteel.com
Corporate Office: Mumbai
Project Locations:
Seraikela (Jharkhand),
Jamshedpur (Jharkhand),
Haldia (West Bengal), Dhamra
(Odisha), Kalinganagar
(Odisha), Tarapur
(Maharashtra)
Facor Steels Ltd.
www.facorsteel.com
Corporate office: Nagpur
Project Locations: Nagpur
(Maharashtra)
Visa Steel Ltd
www.visasteel.com
Corporate Office: Kolkata
Project Locations:
Golagaon (Odisha), Raigarh
(Chhattisgarh),
Kalinganagar (Odisha)
MSP Steel & Power Ltd
www.mspsteel.com
Corporate Office: Kolkata
Project Locations:
Manuapali (Chhattisgarh)
Mahamaya Steels Industries Ltd
www.mahamayagroup.in
Corporate Office: Raipur
Project Locations:
Raipur (Chhatisgarh)
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Rashtriya Ispat Nigam Ltd
www.vizagsteel.com
Corporate Office:
Vishakhapatnam
Project Locations:
Vishakhapatnam (Andhra
Pradesh)
JSW Steel
www.jsw.in
Corporate Office: Mumbai
Project Locations:
Salem (Tamil Nadu), Tarapur
(Maharashtra), Kalmeshwar
(Maharashtra), Dolvi
(Maharashtra)
Steel Authority of India Ltd (SAIL)
www.sail.co.in
Corporate Office: New Delhi
Project Locations:
Bhilai (Chhattisgarh), Bokaro
(Jharkhand), Rourkela
(Odisha), Durgapur (West
Bengal)
Bhushan Steel
www.bhushan-group.org
Corporate Office: New Delhi
Project Locations:
Khopoli (Maharashtra),
Narendra Pur (Odisha),
Rourkela (Odisha), Sahibabad
(UP)
Jindal Steel and Power Ltd
www.jindalsteelpower.com
Corporate Office: New Delhi
Project Locations:
Raipur (Chhattisgarh), Raigarh
(Chhattisgarh), Angul
(Odisha), Barbil (Odisha),
Godda (Jharkhand)
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Monnet Ispat
www.monnetgroup.com
Corporate Office: New Delhi
Project Locations:
Raipur (Chhattisgarh), Raigarh
(Chhattisgarh), Malibrahmani
(Odisha)
Tata Sponge
www.tatasponge.com
Corporate office: Bilaipada
Project Locations:
Bilaipada (Odisha)
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2.2 Foreign Players in the Indian Iron and Steel Industry
Foreign players over the years have had limited presence in the Indian iron and steel sector due to
various regulatory barriers. However, with the relaxation of the FDI limit in the sector to 100%, the
industry has started witnessing investments from foreign companies.
As per the Department of Industrial Policy and Promotion (DIPP)5, the Indian metallurgical industries
received foreign direct investments (FDI) in the amount of around USD 9 billion in the period April
2000–March 2016.
Nevertheless, the primary mode of engagement with the Indian market continues to be trade, as
very few foreign companies presently have manufacturing facilities in India. Some of the leading
foreign players with some presence in India are as follows:
Company Country Website Mode of Entry
Nippon Steel & Sumitomo Metal
Japan www.nssmc.com
Joint Venture
with Tata Steel
Gerdau
Brazil
www.gerdau.in
Joint Venture
with Kalyani
Steels
POSCO
South Korea www.posco-india.com Wholly-owned
subsidiary
5 Department of Industrial Policy & Promotion was established in the year 1995, and in the year 2000 Department of Industrial Development was merged with it. It functions under the Ministry of Commerce and Industry, Government of India. This department is responsible for formulation and implementation of promotional and developmental measures for growth of the industrial sector, keeping in view the national priorities and socio-economic objectives.
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ArcelorMittal
Luxembourg www.jaibalajigroup.com Wholly-owned
subsidiary
Potential Investments from Foreign Players
Some of the major potential foreign investments in the Indian iron and steel sector are as follows:
Tidfore Heavy Equipment Group, a major infrastructure company, based in China, is looking to
enter the Indian market by signing an investment agreement worth USD 150 million with Uttam
Galva Metallics.
ArcelorMittal SA has plans to form a Joint Venture in India with Steel Authority of India Ltd
(SAIL), to manufacture high-end steel products with applications in the defence and satellite
industries.
POSCO, the Korean steel giant, has signed an agreement with Shree Uttam Steel and Power to
set up a steel plant at Satarda in Maharashtra.
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2.3 Current Status-Import Dependence
India has been a net importer of steel for long while, barring a brief period in 2013-14, when the
exports outstripped the imports marginally after a period of six years.
The reasons for India’s dependency on steel imports are manifold. For one thing, certain types of
highly specialized steels such as automotive or defence grade steels are not manufactured in India or
are not made in adequate quantity and hence have to be imported from countries like Japan.
The table below illustrates total production, consumption, import & export for finished steel.
Period 2011-12 2012-13 2013-14 2014-15 2015-16
Total
Production
(MT)
75.70 81.68 87.67 92.16 90.98
Consumption
(MT)
71.02 73.48 74.09 76.99 81.52
Import (MT) 6.86 7.93 5.45 9.32 11.71
Export(MT) 4.59 5.37 5.98 5.59 4.08
Source: Joint Plant Committee, Ministry of Steel, Government of India
Also, India being one of the fastest growing developing countries in the world, consumption of steel
in sectors like infrastructure and automobiles is very high, and often the domestic players are not
able the meet the demands of the market. China, South Korea, and Japan are the top 3 exporters of
steel in India.
Source: Ministry of Commerce, Government of India
USA, 544.86
UK, 398.02
UAE, 422.35
South Africa, 357.79
Russia, 322.19
South Korea, 1,877.16
Japan, 1,490.42Germany, 278
Indonesia, 244.03
Brazil, 261
China, 2,359.24
Indian Steel Imports by Country in FY 2015 (in USD million)
USA
UK
UAE
South Africa
Russia
South Korea
Japan
Germany
Indonesia
Brazil
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3.0 Regulatory
Framework and
Import Policy
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3.0 Regulatory Framework & Import Policy
3.1 Import Policy, Regulations & Procedure
India’s import regulations and procedures are governed by the Foreign Trade (Development &
Regulation) Act of 1992 and the Export Import (EXIM) Policy. The Directorate General of Foreign
Trade (DGFT)6 is the apex body governing all matters relating to the EXIM policy.
The import policy in India allows for the unrestricted import of all items, except for the ones
classified as restricted, canalized, and prohibited. Iron and steel products do not belong to any of
the aforementioned special categories and hence can be imported freely without a special import
license under the existing import policy.
The importers of freely importable commodities like iron and steel are required to register with the
Directorate General of Foreign Trade (DGFT) and obtain Importer Exporter Codes (IEC) issued against
their Permanent Account Numbers (PAN). Registration with regional licensing authority is a
prerequisite for the import and export of goods. The customs will not allow the clearance of goods
unless the importer has obtained an Import Export Code (IEC) from the regional authority. Once the
IEC has been issued, the source of import items is to be mandatorily declared.
There are however a few trade regulations and restrictions that the exporters and importers of
iron and steel into India must comply with:
Bureau of Indian Standards
The Bureau of Indian Standards (BIS) Bill, 2015 is meant to repeal the BIS Act of 1986 and set BIS up
as the National Standards Body of India. This in turn enables the government to bring more
products, systems, and services under the ambit of various standardization norms.
The Indian Ministry of Steel recently added on 15 more steel and steel products to the existing list of
BIS certified products. Consequently, there are a total of 36 steel and steel products, including mild
steel wire rods, cold reduced low carbon and hot rolled carbon sheets and strips under the purview
of BIS.
The BIS license seeks to provide a third-party guarantee of quality, safety, and reliability for various
products to the customer. The time taken for completion of BIS certification process usually varies
from 9 to 18 months. As per BIS norms, the sale or distribution of steel and steel products under the
6 The Directorate General of Foreign Trade (DGFT) is the agency of the Ministry of Commerce and Industry of the Government of India responsible for administering laws regarding foreign trade and foreign investment in India
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purview of BIS norms, that do not conform to the specified standards and do not bear the BIS mark,
is prohibited. All domestic and global steel manufacturers have to put in an application to the BIS to
obtain the BIS license and maintain it thereafter.
With BIS certification being mandatory to export products to India, many global suppliers have
already obtained the necessary license. There are a total 33 companies across the world, which have
the BIS license in place to export flat steel products to India.
Minimum Import Price (MIP)
To protect the domestic steel industry, the Government of India in February 2016 imposed a
Minimum Import Price (MIP) on inbound shipments of steel priced at below-cost levels. The MIP
serves as the floor price rate below which overseas shipments of specified items are not allowed to
enter the country. In February, the government had imposed an MIP of USD 341-752 per tonne on
173 steel products for a period of six months to protect the local industry against predatorily priced
imports from steel-surplus countries like Japan, Korea, and China.
The Minimum Import Price, although no longer applicable to all of the original 173 steel products is
still in place, and until further notice will be applicable for specified steel products.
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3.2 Import and Export Trends
According to the Indian government data, steel imports rose by 25.6% to 11.71 MT during financial
year 2015-16 compared with 9.32 MT in the year-ago period. On the other hand, India is rapidly
losing its export competitiveness, selling just 4.08 MT during the last financial year. Historical data
shows that in 2003-04, India’s steel imports were 1.5 MT and exports stood at 4.5 MT. In 2014-15,
the country’s steel imports raced to 9.3 MT while exports barely rose to 5.5 MT.
The share of iron and steel in India’s total foreign trade for the 2015-16 has been provided
hereunder:
Export of iron and steel Total Exports Share in India’s Total Exports
USD 5.4 billion USD 262.2 billion 2.09 %
Top Countries of Export for Iron and Steel
Bangladesh Indonesia
Belgium Italy
Taiwan South Korea
China Nepal
Iran UAE
Source: Ministry of Commerce, Government of India
Import of iron and steel Total Imports Share in India’s Total Imports
USD 11.2 billion USD 381 billion 2.95%
Top Importing Countries
USA South Korea
UK Japan
UAE Germany
South Africa Indonesia
Russia Brazil
Source: Ministry of Commerce, Government of India
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India’s Import & Export Trend with respect to Brazil
India’s iron and steel exports to Brazil, although marginal, had been on a steady growth path from
2011-12 to 2014-15, before declining precipitously by over 50% in 2015-16 to under USD 45 million.
Source: Ministry of Commerce, Government of India
India has over the years had a significant trade deficit with Brazil for iron and steel. Currently valued
at over USD 260 million, India’s import of iron and steel from Brazil has grown an impressive CAGR of
around 24% over the last three years.
Source: Ministry of Commerce, Government of India
63.56
78.5484.11
101.21
44.58
0
20
40
60
80
100
120
Ind
ia's
Exp
ort
of
Iro
n a
nd
Ste
el t
o B
razi
l (U
SD
mill
ion
s)
India's Export of Iron and Steel to Brazil
2011-12 2012-13 2013-14 2014-15 2015-16
246.62
311.14
137.03
207.76
261.33
0
50
100
150
200
250
300
350
Ind
ia's
Imp
ort
of
Iro
n a
nd
Ste
el f
rom
Bra
zil
(USD
mill
ion
s)
India's Import of Iron and Steel from Brazil
2011-12 2012-13 2013-14 2014-15 2015-16
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The top iron and steel imports from Brazil in the last three years have been ferro-alloys, ferrous
waste and scrap, semi-finished products of iron and non-alloy steel, and flat-rolled products of Iron
and non-alloy steel. These products have not just been the biggest iron and steel imports into India
from Brazil, but they have also grown steadily import value in the last three years.
Source: Ministry of Commerce, Government of India
55.04
29.82
3.76
21.29
73.68
46.82
7.82
44.08
78.62
67.76
31.64
56.01
0
10
20
30
40
50
60
70
80
90
Ferro-Alloys (HS: 7202) Ferrous Waste and Scrap(HS: 7204)
Semi-finished Products ofIron or Non-Alloy Steel
(HS: 7207)
Flat Rolled Products ofIron or Non-Alloy Steel
(HS: 7208)
Iro
n a
nd
Ste
el Im
po
rts
(in
USD
mill
ion
s)
Top Iron and Steel Imports from Brazil (in USD millions)
2013-14 2014-15 2015-16
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3.3 Import tariffs & Duties, Antidumping duty (if any)
Customs Duty is a type of indirect tax levied on goods imported into India as well as on goods
exported from India. Import duties are generally segmented into the following categories:
• Basic Duty
• Additional Custom Duty
• CVD – Countervailing Duty
• Anti-dumping Duty (specific applicability)
• SAD – Special Additional Duty
• Education Cess
We have considered the below mentioned HS codes for the iron and steel industry in India:
HS Code Custom Duty (Effective)
7201 through 72015,
7218 through 7220,
7224, 7229, 72251100,
72261100
Customs Basic Duty: 15%
Education Cess: 2%
Secondary and Higher Edu. Cess: 1%
Countervailing Duty (CVD): 12.5%
Net Effective Duty 30.256%
7213 through 7217,
7221 through 7223,
7206, 7207, 7227,
7228, 72253010,
72262022
Customs Basic Duty: 10%
Education Cess: 2%
Secondary and Higher Edu. Cess: 1%
Countervailing Duty (CVD): 12.5%
Net Effective Duty 24.463%
7208 through 7212,
72253090, 72251100
Customs Basic Duty: 12.5%
Education Cess: 2%
Secondary and Higher Edu. Cess: 1%
Countervailing Duty (CVD): 12.5%
Net Effective Duty 27.359%
Source: Central Board of Excise and Customs, Government of India
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Antidumping Duty
Anti-Dumping duty imposed on six nations, including Brazil. In August 2016, on the
recommendations of the Directorate General of Anti-Dumping (DGAD) the Indian Government
imposed an anti-dumping duty of USD 474-557 per tonne on imports of hot-rolled steel products
from six nations, namely China, South Korea, Japan, Brazil, Indonesia, and Russia, in an attempt to
protect the domestic producers of steel against cheaper imports. The duty is to be in force for six
months till 7th February 2017.
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4.0 Opportunity
Assessment
for Brazilian Products
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4.0 Opportunities for Brazilian Products
Iron and steel is one the most important industries in Brazil, with the country being the one of the
biggest exporters of steel in the world. Having a crude steel production capacity of around 50 MT
and a crude steel output of over 30 MT, Brazil is one of the major steel producing nations in the
world.
With India being a traditional net importer of steel and Brazil being one the biggest net exporters
of steel in the world, natural synergies can be derived between the two nations through trade.
Going by historical trends, the product segments with potential in the Indian market are ferro-alloys
(HS:7202), ferrous waste and scrap (HS: 7204), semi-finished products of iron and non-alloy steel
(HS:7207), and flat-rolled products of iron and non-alloy steel (HS:7208).
However, India’s recent protectionist measures have to be taken into account before embarking on
any trade activities with India. Although the recent anti-dumping duty on Brazil and, five other
countries is temporary, Brazilian exporters should be wary of such restrictive measures.
4.1 Opportunity Assessment Table
Export Potential
or Value Segment High Potential Medium Potential Low Potential
Ferro-alloys (HS: 7202) ✓
Ferrous waste and
scrap (HS:7204) ✓
Semi-finished products
of iron and non-alloy
steel (HS:7207)
✓
Flat-rolled products of
Iron and non-alloy
steel (HS: 7208)
✓
Potential for Local
Manufacturing for the
above products
High Potential Medium Potential Low Potential
Overall Product
Portfolio
✓
(The barriers to entry
into the Indian iron
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and steel sector are
mitigated by the Indian
Government’s
initiatives to promote
investments in India.)
Entry Barriers
• High Competition: The iron and steel industry in India is dominated by some of the biggest
players in the world with immense financial resources, and well-established distribution
networks.
• Regulatory Constraints: Despite the Indian Government’s constant efforts to invite
investments in this sector, a number of regulatory barriers concerning land acquisition and
environmental norms persist in India.
Target Customer Segments
• B2B Customers in Engineering, construction, and automobile industries.
Market Insights
• The Indian iron and steel sector is one of the oldest and biggest sectors in India, and hence
at a very advanced level of maturity.
• The competition is strong in the iron and steel industry in India with the presence of multiple
well-established domestic players from both the public and private sectors.
• The iron and steel market in India has traditionally been import dependent for specialist
grades of steel
• The Government of India has allowed 100% FDI in the iron and steel sector under the
automatic route.
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5.0 Potential Distributor
Mapping
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5.0 Potential Distributor Mapping
As part of the economic liberalization policy, the iron and steel industry was on one of the first in
India to be deregulated. Pricing and distribution of steel were deregulated in India in 1992.
However, given the importance of the iron and steel industry to the economy of the country, the
government has retained some presence in the distribution network to ensure that the demands of
small scale industries, and sectors of strategic import like defence and railways are efficiently met.
To this end, the Government of India allocates a stipulated quantity of steel to the small-scale
industries in India. The allocation is routed through the State Small Scale Industries Corporations
(SSICs) and the National Small Industries Corporation (NSIC). In order to ensure that the small-scale
industries get the raw materials of iron and steel they need to carry out their operations, the
Government pays the SSICs handling charges in the form of subsidies to deliver the allocated steel
from producers like SAIL, RINL and TISCO to the small-scale units’ doorsteps.
There are however many independent distributors and importers of iron and steel in India. A list
of some of the biggest distributors in this space has been provided hereunder:
Company Website Products Distributed Corporate
Office
Mehta Steels
www.mehtasteels.com
Hot rolled sheets and plates,
hot rolled coils, mild steels
plates, chequered plates,
crane rails.
Bhilai
United Steel Distributors
www.unitedsteel.co.in
RHS/SHS7 plates, TMT
(Thermo Mechanically
Treated) bars, galvanized
sheets, MS (Mild Steel)
angles
Chennai
S.M. Steels www.smsteels.com
TMT Rebars, flat products
(plates, sheets), structural
steel products (angles,
channels, beams)
Mumbai
7 A Hollow Structural Section, or HSS, is a type of metal with a hollow tubular section. These sections can be circular (CHS), square (SHS) or rectangular (RHS).
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Shri Lakshmi Steel Suppliers
www.steelsupplier.in
TMT Rebars, MS angles,
ISMC (Indian Standard
Medium Channel), ISMB
(Indian Standard Medium
Weight Beam), MS plates,
MS pipes and GI Pipes, MS
hollow sections, MS flats
and wire rods.
Bangalore
Tanishk International Trade
www.tanishk.in
TMT bar, galvanized steel,
TMT rebar, cold rolled steel,
equal angles, galvanized flat
Chennai
V.K. Industrial Corporation
Limited www.vkicl.com
Boiler quality plates, high
tensile steel plates,
structural steel plates, wire
rods, hot rolled and cold
rolled coils and chequered
plates
Mumbai
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6.0 Key Influencers
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6.0 Key Influencers
1. Joint Plant Committee
SPOC (Single Point of
Contact): Mr. Syedain Abbasi (Chairman)
Email: [email protected]
Website: www.jpcindiansteel.nic.in
Address: Joint plant committee, Ispat Niketan, 52/1A Ballygunge Circular Road
State & Pin Code: Kolkata – 700019
Tel: 91-33-2461 4055
2. Ministry of Steel, Government of India
SPOC: Chaudhary Birender Singh (Union Minister of Steel)
Email: [email protected]
Website: www.steel.nic.in
Address: Udyog Bhavan
State & Pin Code: New Delhi - 110107
Tel: 91-11-23063417
3. Steel Research and Technology Mission of India
SPOC: Mr. S.S. Mohanty (Member Secretary)
Email: [email protected]
Website: www.srtmi.org
Address: Ispat Bhawan, Lodi Road
State & Pin Code: New Delhi - 110003
Tel: 91-11-24367105 / 24363358
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7.0 Major Trade Events
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7.0 Major Trade Events
Sl. No. Name of the Event Event Dates Venue City
1
India Steel 2017 20-22 April 2017 Mumbai
Exhibition Centre Mumbai
Event Profile
India Steel, a joint initiative of the Ministry of Steel, Government of India and
Federation of Indian Chambers of Commerce and Industry (FICCI), is a major exhibition
and conference for the steel industry. It provides a platform to the participants,
delegates, business visitors and the key decision makers from steel and other related
industry to interact with one another, and explore new business avenues.
Website
www.indiasteelexpo.in
Trade Event Frequency
Once in 2 Years
Sl. No. Name of the Event Event Dates Venue City
2
National Expo 15-17 December
2017 BTI Ground Raipur
Event Profile
National Expo, organised by Indore Infoline, is central India's largest steel and power
exhibition. The 9th edition of the event will be held in Raipur in December 2017. The
event is attended by the various stakeholders in the steel, power, mining, cement
and construction industries, and provides opportunities for business development in
areas such as foundries, washeries, industrial finance, raw materials, re-rolling mills,
power plants, mining plant equipment.
Website
www.steel-powerexpo.com
Trade Event Frequency
Annual
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