India’s Steel Sector to Grow Faster Than GDP by 2030, Says Anand Rathi Report
A report by Anand Rathi predicts that India’s domestic steel sector will grow faster than the country’s GDP from FY 2024 to FY 2030. Driven by urbanization and increased public-private capital expenditure, the sector is expected to grow at a compounded annual growth rate (CAGR) of 8-10%.
By 2030, India is forecasted to produce 210-220 million metric tonnes of steel, with domestic consumption reaching 190-210 million tonnes. The report highlights that the Indian steel industry has shown resilience despite global challenges affecting the commodity sector.
In contrast to China’s sluggish steel demand, India’s consumption has been fueled by investments in infrastructure, construction, renewable energy, and the automobile sector. The government’s strong focus on infrastructure, evidenced by a 15% capex outlay CAGR in the Union Budget over the past 13 years, has been a key driver behind the sustained growth of steel demand.
In the first eight months of 2024 alone, crude steel production in India rose 7.4% year-on-year to 98.7 million tonnes, making India the fastest-growing steel producer globally. As of May 2024, India holds an 8% share of the global steel market, consistently improving its position as the second-largest steel producer in the world, surpassing Japan in 2018.
The report also notes that India is at an inflection point in its urbanization journey, similar to China in the early 2000s and other developed nations in the 1960s and 70s. By 2030, India’s urban population is expected to reach 590 million, driving increased spending on urban infrastructure and boosting steel demand.
The National Steel Policy (NSP) aims to expand crude steel installed capacity to 300 million tonnes by FY30-31 to meet this growing demand. As India moves closer to becoming a USD 5 trillion economy, steel consumption is set to rise, underpinned by infrastructure projects and urbanization efforts.
While China’s steel exports are projected to reach 120 million metric tonnes in 2024 due to weak domestic demand, India’s steady growth and investment climate ensure a more favorable outlook for the steel industry.
Doubts Revealed
GDP -: GDP stands for Gross Domestic Product. It is the total value of all goods and services produced in a country in a year.
Anand Rathi -: Anand Rathi is a company that provides financial services like investment advice and research reports.
FY -: FY stands for Fiscal Year. It is a one-year period that governments and businesses use for financial reporting and budgeting. In India, it starts on April 1 and ends on March 31 of the next year.
CAGR -: CAGR stands for Compound Annual Growth Rate. It shows how much something grows over a period of time, taking into account the effect of compounding.
Metric tonnes -: A metric tonne is a unit of weight equal to 1,000 kilograms. It is used to measure large quantities, like steel production.
Urbanization -: Urbanization means more people moving to cities and towns from villages. This often leads to the building of more houses, roads, and other infrastructure.
Public-private capital expenditure -: This means money spent by both the government and private companies on building things like roads, bridges, and factories.
Infrastructure -: Infrastructure includes basic facilities like roads, bridges, water supply, and electricity that help a country function smoothly.
