Steel consumption rises in India after GST amendment

Consumption of steel in India has increased by around 7 percent after the government amended the goods and services tax (GST) rules for the industry, said Aruna Sharma, former steel secretary.

The steel industry also responded to the government's move by producing quality steel, she added. "Recently the government has again emphasized that once the BSI’s standardisation is there, there should not be any difference of the integrated or secondary kind of steel plants, then the product is a product. Government’s reaction time was very quick and that is what makes the whole difference,” she said.

Sharma rated the current Narendra Modi government at 7.8 and cut the marks in the area of research. She also added that the Insolvency and Bankruptcy Code (IBC) was very time-consuming.

Speaking about steel scrap being imported, Sharma said, “There is a case for the scrap steel that we have to come up very strongly with our scrap policies and create as much as scrap as possible for the scrap-based whereas the stainless steel scrap is also concerned, unless until we are able to produce that, we should get the scrap instead of finished products. So if we remove the import duty on stainless steel scrap as we do not have, the semi-finished product will stop coming because our production will become quite competitive.”

Seshagiri Rao, joint managing director and group CFO, JSW Steel said the Indian steel industry has created 27 million tonnes of incremental capacity, resulting in an average of 5-6 million tonnes of incremental capacity.

In terms of demand, he added, “In 2014-2015, the demand used to be 3 percent which is close to 0.5 percent of the gross domestic product (GDP) growth whereas if you see March 2019 numbers which have been released by the steel ministry, it was 8.8 percent. March 2019 year as a whole, the steel demand growth was 7.5 percent. So from 3-3.5 percent to 7.5 percent is the growth in demand.”

“On consumption side, India is growing much faster than the world. IBC and stress that is there in the industry have led to consolidation of the industry. There is change in controlling many companies which is also good for the industry for long-term sustainability,” he further mentioned.

“India, being a very attractive destination for steel consumption, imports are growing into India whereas exports are falling. For March 2019 numbers, the imports have grown by 4.5 percent whereas exports have fallen by 16 percent. That is the concern as far as the government measures are concerned. They should act proactively to ensure that the domestic industry is not injured by the dumping from overseas,” said Rao.

Source: CNBC-TV 18