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MOTORINDIA
l
August 2012
127
its strong forward and backward
linkages, contributes significantly to
overall growth and development of
the economy. As per estimates, the
industry today directly contributes
two per cent of India’s gross domes-
tic product (GDP), and its weight-
age in the official Index of Industrial
Production (IIP) is 6.2 per cent.
The steel industry has also grown
at a handsome pace from a crude
steel production of less than 22 mil-
lion tonnes (MT) in 2000 to about
72 MT in 2011-12 with a CAGR of
11.4 per cent. The per capita con-
sumption has increased from 29 kg
in 2000 to 59 kg in 2011-12. Almost
70 per cent of the population of India
lives in rural areas where per capita
consumption is as low as 10 kg.
The Government plans to increase
infrastructure spending from the
current five per cent of the GDP to
10 per cent by 2017. Given India’s
double-digit energy deficit, one-
third of the allocated amount or
infrastructure spending is directed
towards the power sector.
Besides power, the Government
has proposed investment of $1 tril-
lion in infrastructures (roads, bridg-
es, ports, airports, railways, etc.)
during the XIIth Five-Year Plan
ending 2017.
Taking 15 per cent as steel com-
ponents in total investment, it can
generate additional demand worth
$75 billion of steel in the next five
years or $15 billion worth of addi-
tional demand per year or in terms
of quantity, additional demand of
around 19 million tonnes per annum.
Investment
in
infrastructure
would have its cascading effect on
demand of steel from construction,
automotive, engineering and capital
goods industries. Besides, the Indian
power sector may expect orders for
over 100 giga watts over the next
few years. In addition to power plant
construction, steel will also be ex-
tensively used in making pipelines
and power equipment.
With schemes like the National
Rural Employment Generation Act
(NREGA), investment in rural areas
and, in turn, purchasing power of ru-
ral India is increasing.
Improvement in rural incomes
will also increase steel consumption
in some form or the other. This will
be further facilitated when all vil-
lages of India get electricity, have
water supply and are connected by
road.
The Government, through vari-
ous schemes, is trying to achieve
this target within the next three-five
years. This will provide a real op-
portunity for rural India for growth
and, in turn, enhance steel consump-
tion in the country.
The Working Group on Steel In-
dustry for the 12th Five-Year Plan
envisages capacity to reach a level
of 149 million tonnes per annum by
the end of the Plan. This implies that
the country would be nearly dou-
bling its steelmaking capacity in the
next five years. This translates into
addition of over 15 million tonnes
per annum of steelmaking capacity
every year.
- PTI Economic Service
There is a significant growth potential
as in the consumption of steel with
investments in infrastructure, rapid
urbanisation and growth in manufac-
turing in India. India is expected to
eventually catch up with the global
average of 200 kg.
AUTO INDUSTRY