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The last few years have seen the Indian steel
industry staging a smart turnaround in its
performance. The main factors, which contributed
to this are, rise in the global steel consumption, output
stagnation in developing economies, resulting in firming
up of international prices, growth in the Indian economy
leading to the increased domestic consumption, business
restructuring and reengineering of business processes.
India has rich resources for steel making with the
following potential advantages, which have not yet been
fully leveraged.
The current international boom should not lull our industry into a misplaced
optimism. In general, local factors such as availability of cheap trained workforce, low
power cost and low specific investment through adoption of most effective process
technology make a substantial difference in the cost of production for any country. In
this article, we briefly capture the points highlighted by certain studies on the
competitiveness of the Indian steel industry.
The Joint Plant Committee (JPC) published a report in February 2003, which ranked
India as the ninth most cost competitive steel producer in the world, the first eight
countries being CIS, China, South Korea, Brazil, Taiwan, Australia, Mexico and the UK.
India ranks ahead of at least five countries, including the US, as far as
cost-competitiveness of steel production is concerned. The JPC study covered 14
countries and pointed out the weaknesses and strengths of production and marketing
systems, thus enabling entrepreneurs and policy makers to take corrective measures.
However, the report itself has stressed that cost-competitiveness may not necessarily
translate into international competitiveness due to various factors like high tariffs,
transportation cost and other non-tariff barriers. Further, the study cautions that the
differences in product quality might not have been factored in the comparison, which is a
serious limitation.
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