Problems faced by iron and steel industries in India

Problems faced by iron and steel industries in India

India is the third largest steel producer in the world with the annual capacity of 101.4 metric tonnes of crude steel production. Despite this, India imports a large quantity of steel from China and other countries, especially in the cold flat-rolled segment. The prevailing situation is a result of underlying problems in the Indian iron and steel industry.

The major problems faced by iron and steel industries are as follows:

Lack of capital:

The iron and steel industries require massive amounts of working capital. The manufacturers need to update and upgrade their facilities at regular intervals in order to stay competitive at national and international level. This process requires a large amount of financial investment at regular intervals. Such a steady inflow of investment is not affordable by a developing country like India.

Lower productivity:

The per capita labour productivity of India is around 80-100 MT tonnes, which is much lower than the global average. The labour productivity in steel producing countries like China, Korea, Japan and other major steel producing countries is around 600 tonnes per year.

Cheap imports:

The Indian iron and steel industries are plagued by cheap imports from other countries such as China, Korea, and Russia. China, in particular, produces 1,691.2 million tonnes (MT) of crude steel that is nearly half of the total global output. The Indian industry is flooded with so many low cost imports from China and other countries that the domestic companies find it difficult to compete with them.

Lack of technology:

The outdated technology of production characterizes the Indian iron and steel industries. Initially, the production technology was imported from developed countries at regular intervals. The scenario changed after the increase in global oil prices and other energy costs that increased the input costs. The rise in input costs decreased the profit margin for the industry. Because of these circumstances, the investment of technological advancements was subsequently reduced.

Under-utilization of resources:

The resource utilization rate in the Indian iron and steel industry is meager as compared to other countries. The potential utilization is never more than 80% for any of the plant in India. The Durgapur steel plant, in particular, utilizes only 50% of its potential. Such an unproductive state of the industry is due to many factors such as strikes, scarcity of raw material, energy crisis, lockouts etc.

One of the feasible solutions for this industry is to stay updated with the latest industry standards. Following global industry standards will help them to compete in the international market. Experts frame industry standards after years of extensive research and experiments. Standards have a wide coverage over different industrial processes such as standards for heat treatment of metals, standards for methods of testing, standards for screw threads, etc. The industry can improve its production quality and output by following the standards for production of metals and for other industrial processes.


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