Molten Metal: There is a tremendous opportunity of growth by enhancing steel intensive investment – Sushim Banerjee, DG, INSDAG

As the Director General of the Institute of Steel Development and Growth (INSDAG), he is in charge of charting the path that will help India consume more steel and truly become the developed economy that she so desires by the yardsticks of production and consumption of steel. Meet Sushim Banerjee, the visionary who is quietly igniting the minds of the engineering students – builders of tomorrow – to incorporate more steel in their designs. Here he talks to Core Communique on a series of issues relating to steel, INSDAG and the matters that are close to his heart.

Q1.         What is the per capita consumption of steel in India?

Ans.       The current consumption of steel in India is 59 kg. This is against the per capita consumption of 460 kg of China and World’s average of 218 kg.

Q2.         How do you view this – as an opportunity for growth or a failure of the economy?

Ans.       The lower per capita consumption of steel in India indicates a high potential of more use of steel in various economic activities. There is a tremendous opportunity of growth by enhancing steel intensive investment. I, therefore, look at it as an opportunity for growth.

Q3.         What three things need to be done immediately to increase our consumption?

Ans.       In order to increase our steel consumption, following needs to be ensured:

a)      Enhance fixed investment / GDP ratio from current 30% to atleast 35%.

b)      Enhance the share of manufacturing sector from the current 16% to 25% by 2025 as envisaged in the Manufacturing Competition Commission Council.

c)       Tap the rural potential for steel consumption by setting up fabrication facilities in and around the villages.

Q4.         What is the need of the hour – to increase production and availability or create a demand pull?

Ans.       In my view, demand pull requires enhanced availability and increased production. Indian steel industry has been operating at an average capacity utilization of around 85% which implies that if demand is increased, there should not be any immediate problem of enhancing availability by higher production.

However, the current bottlenecks of Greenfield expansion in terms of raw material linkage and land acquisition may create situation where increased demand may have to be filled in by higher imports.

Q5.         Where do you see India’s consumption and production of raw steel in 2020?

Ans.       By 2020, India’s steel consumption can be predicted by looking at the GDP growth rate. Also higher contribution of industry sector particularly the manufacturing sector and higher investment in infrastructure and construction would generate steel demand along with GDP growth. In the recent study, it has been assessed that if GDP grows at 6%, finished steel consumption in the country would reach 128 MT, for 7% GDP growth, projection is 141 MT and for 8% GDP growth, the country’s demand would reach around 155 MT.

The capacity scenario is depending on the resolution of raw material linkages and land acquisition issues. As a realistic assessment, it has been predicted that steel capacity in the country may reach 202 MT by 2020, which would imply that estimated projection of finished steel would be able to meet the assessed demand of 155 MT (assuming 90% conversion from crude steel to finished steel and 85% capacity utilization).

Q6.         What steps are being taken by INSDAG to meet the anomalies?

Ans.       INSDAG is focusing on generation of demand by promoting usage of steel in construction. INSDAG is continuously striving to educate the students of engineering colleges, faculties and professionals (both Architects and Structural Engineers) about the various advantages and good properties of steel which will need to be innovative and cost effective structures. INSDAG is involved in developing Codes and Standards for appropriate and efficient use of steel. By making innovative steel structural design, INSDAG is translating the theoretical knowledge into practical structures. INSDAG is also attempting to tap the rural potential of steel consumption by arranging rigorous “Skill cum Entrepreneurship Development Programme” by educating the village entrepreneurs into steel fabricators. The availability of steel fabrication facilities and easy availability of steel by engaging rural steel dealers by major steel producers would facilitate the higher consumption of steel in the rural sector.

Q7.         Anything that you would like to communicate to our readers?

Ans.       The current economic scenario in the country raises lot of uncertainties.  A political consensus is essential in order to carry forward the various economic reforms, which would enable the benefits of economic growth to reach the poorest components of our population.

                The growth of industry needs to focus on sustainable development and therefore, energy efficient process of steel making should receive highest priority. The government needs to reduce wasteful subsidies by doing away with intermediates in the supply chain and enhance planned investment to create capital assets. The income inequality which is on the rise may create further social tension unless monitored and controlled by appropriate government policies.

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