By Prachi Srivastava
Exports are an important component of the aggregate demand of an economy. A rise in exports leads to an increase in employment and a decrease in current account deficit. Therefore, they are extremely crucial for the economic growth of a nation. Currently, India is the third largest exporter of steel in the world with plans to gain a stronger foothold in the immediate future.
Rising steel exports
Steel exports in India have surpassed imports and jumped by 102.1 per cent in 2016-17 to 8.24 million tonnes (mt). This can be compared to the 4.07 mt shipped out in the previous financial year (2015-16). Exports in March 2017 at 1.62 mt were up by 363 per cent from March 2016 and grew by 114 per cent since February 2017.
Moreover, with the increase in exports, the imports of finished steel stood at 7.42 mt in 2016-17, declining by 36.6 per cent from 11.71 mt of imports in 2015-16. The surplus in exports has made India a net exporter of steel and it aims to become the second largest exporter of steel by 2018-19, by overthrowing Japan.
Since domestic consumption is on the lower side, steel producers have been increasingly focussed on exports. A similar trend is expected in 2017-18 because of brown-field expansion of steel in India— using an existing facility to begin new production activities. The Director General of the Institute for Steel Development and Growth, Sushim Banerjee, was reported as saying that steel producers— including SAIL— have been drawing up big plans for exports due to the aforementioned factors.
Opportunities galore for the domestic industries
India’s comparatively low per capita steel consumption offers huge scope for growth. An expected rise in consumption can be realised due to the increased infrastructure construction and the thriving automobile and railways sectors. The government has already increased the budgetary allocation for infrastructure in the Union Budget for 2017-18. Along with that, the government has also taken several measures and initiatives. Narendra Singh Tomar, the Union Minister for Steel, Mines, Labour and Employment, has launched the National Mineral Exploration Policy (NMEP). This policy will help adopt comprehensive exploration of non-fuel and non-coal mineral resources that would give a major boost to the economy.
The Ministry of Steel is also facilitating the setting up of an industry-driven Steel Research and Technology Mission of India (SRTMI) in association with the public and private sector steel companies. The aim of this institution would be to spearhead research and development activities in the iron and steel industry with an initial corpus of Rs 200 crore (US$ 30 million). Furthermore, the Central Board of Excise and Customs (CBEC) has issued a notification announcing zero export duty on iron ore pellets. This shall help the domestic industry to become more competitive in the international market, thereby boosting India’s economic growth even further.
Featured Image Credits: Livemint
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