Indian Steel: Waiting For Industry 4.0

The modern steel industry, like any other under a capitalist production regime, needless to say, is heavily dependent on technology and innovation as a major driver, especially at this day and age when the turnaround time is faster than ever before.

- Madhumita Mookerji

As per the foundational thesis of Joseph Alois Schumpeter, an Austrian-born American economist and political scientist (1183-1950), whenever there is a rise in the technological innovation graph, then industry flourishes, with increasing returns to scale. Thereafter, comes an inevitable period of technological stagnation, a timeband in which industry keeps on producing the same products which end-users consume at a certain level of income. Concomitantly, there is no remarkable spurt in demand, unless that income rises very fast. This leads to a satiation in terms of consumption of the same old product.

Ironically, once the steel manufacturers inevitably start accessing and implementing that high level of technology, in a vicious cycle, the knowledge barrier automatically gets broken, allowing the entry of many players into the field, resulting in production glut. Then there is again a need to raise the bar. Unless and until there is a sudden boost in technology, the industry index will not jump up again in a cyclical reflex.

Dr Susmita Dasgupta, Joint Chief Economist, Economic Research Unit, Joint Plant Committee, tells Steel Insights: “The problem with the technology of steel making is the fact that the growth in its progress has plateaued out and we encounter a fair amount of standardisation in the steel making knowhow across the world. Clearly then, the incremental returns to scale have plateaued out as well and industries like film-making, television and ethical hacking seem to be earning better margins for the same level of investments!”