MSME Steel Sector Likely To Drive India's Future Growth

As India moves towards the targeted 300 million tons (mt) of steel production by 2030, in accordance with the government’s blueprint, a question arises as to how this target will be achieved. The country has been traditionally dependent on the large integrated production route of the blast furnace (BF) and basic oxygen furnace (BOF), the secondary sector having been characteristically relegated to the backyard, neglected in terms of policy and funding push.

- Madhumita Mookerji

In fact, the idea that readily comes to mind at the mention of the “secondary sector” is that of dingy, soot-covered units, spewing carbon, bereft of the shine and brand equity that the large integrated players command.

But what is the secondary steel sector?

At the very outset, Deependra Kashiva, Executive Director, Sponge Iron Manufacturers Association (SIMA), says he has some reservations with regard to the term secondary sector. “The term secondary is not a standard one, because this industry began to take shape from the early 1970s and, at that time, there were restrictions on creation of steel capacity through the integrated steel plants (BF-BOF route). But, the government realised there was a need to create more steel production and processing capacity and thus started giving out licences for the production of steel through the electric arc furnace route and to steel processing units for long products, hot and cold rolled flat products, galvanising and colour coated flat products. At that time, the basic raw material used to be supplied by Tata Steel and Steel Authority of India (SAIL). But, since these smaller units were not producing the steel and steel products from iron ore but through the already produced steel, they used to be called secondary producers. You may have noticed that the National Steel Policy, 2017 has not used the term secondary producers. It has, instead, used the term medium, small and micro enterprises (MSME),” Kashiva told Steel Insights.

The share of the secondary steel producers has roughly been similar over the past 3 years at 57 percent of the total steel produced. Around 65 percent of steel long products comes from the secondary sector, which is quite significant. There are a large number of re-rolling mills, cold rolling mills, galvanising and colour-coating units which produce value-added steel products.