MAKE IN INDIA &
INDIAN STEEL INDUSTRY Jayant Acharya
Director(Commercial & Marketing)
JSW STEEL ,INDIA
18-11-2016
GLOBAL ECONOMY & INDIA
0.5
Global Economic growth continues to be fragile,India remains a “Global Bright Spot”
0.5
7.6
6.9
0.0
2.6 2.0
-3.7
2
WEO:GDP:Oct’16
X-Axis : GDP-PPP Per Capita ($) … Y-Axis : Per-Capita Steel Demand. (Kgs.)
Emerging Market Economies driving Global Steel Demand
Advanced Market Economies Emerging Market Economies
Bubble-Size : Steel Demand-2015 (MnT)
World
Japan
USA
Australia France
Korea
Taiwan
Canada
Germany Italy
China
Mexico
Brazil
India
Indonesia
Africa
1,499-MnT 73% 181-Kgs 27% 316-Kgs
Thailand
Turkey
Russia
GLOBAL STEEL
3
INDIAN ECONOMIC TRANSFORMATION
2015-16 2025-26
17% 25%
Country’s Growth to be fostered by Manufacturing
Manufacturing
4 Ref : Central Statistical Org , National Manufacturing Policy,India
30% 36%
46% 54% 53% 55%
18%
25%
28%
28% 31% 35% 52%
39%
27% 19% 15%
10%
1950s 1970s 1990s 2000s 2015-16* 2025-26*
Services Industry Agri
MAKE IN INDIA : OBJECTIVE
Make in India Global Recognition to
Indian Economy
Investment in
Manufacturing
World Class
Infrastructure
Employment
Facilitate FDI &
Investment Protect Intellectual
Property
Competitive
Industrial Environment Skill Development
5 Ref : Make In India Program,India
GDP Contributes
8%
Projected to
increase to
15% … by 2020
Employment
share
25%
With present work-
force of 110-Mn
Manufacturing
Contributes
45%
To country’s
industrial production
Export
Contributes
40%
To country’s total
exports
A Strong foundation of MSME vital for success of Make-In-India
THE MSME STORY
0%10%20%30%40%50%60%70%80%90%
100%
Tai
wan
Ital
y
Fra
nce
So
uth
Afr
ica
Ger
man
y
Sin
gap
ore
UK
US
Russ
ia
Can
ada
Arg
enti
na
Bra
zil
Ind
ia
MSME contribution to Employment
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Tai
wan
Ital
y
Fra
nce
So
uth
Afr
ica
Ger
man
y
Sin
gap
ore
UK
US
Russ
ia
Can
ada
Arg
enti
na
Bra
zil
Ind
ia
MSME contribution to GDP
6 Ref: KPMG
Steel is vital for the success of manufacturing led economic growth with thrust
on Infrastructure and construction
Developed countries with their prominent industries witnessed economic
development and growth at the back of a robust and sustainable domestic steel
industry
Direct and In-Direct usage of steel across sectors and industries
To build India, ‘Steel - Made-In-India’ is need of the hour
SIGNIFICANCE OF STEEL : MAKE IN INDIA
7
Indian steel industry has large potential for robust and sustainable growth
INDIAN STEEL INDUSTRY
DOMESTIC
DEMAND
LAND
MANPOWER TECHNOLOGY
RESOURCES
Year
MT
8 Ref : Joint Plant Committee-report, World Steel Association
OPPORTUNITIES
9
• Demographic Advantage
• Rurbanization
• Infrastructure & Manufacturing
DOMESTIC DEMAND
• Technological Alliance
• State of the Art Facilities
• Value Added Products
TECHNOLOGY
• Amongst the lowest cost producers
• Entrepreneurship
COMPETITVENESS
DEMAND DRIVERS
AUTOMOBILE
• Contributes 7.1% to GDP and expected to ~12% by 2026
• Expected to be Worlds 3RD largest auto market by 2026
• >6 million hybrid vehicles by 2026
• Commercial Vehicle to grow to 2 Mill by 2026
• Two wheelers 50.6 million units by 2026
AUTO COMPONENTS
• GDP contribution to increase from 2.35% to ~7% by 2026
• CAGR of 14%, 2006 – 2016
• Turnover to increase 5x to $200 Billion by 2026
• Exports to grow 7x to $80 Billion ,2026
• Investments of $40 Billion by 2026
CONSTRUCTION
• Contributes >8% to GDP
• 100 Smart Cities and 500 AMRUT Cities to invite investment of $30 Billion in the next five years
• $9.25 Billion. would be invested under Swachh Bharat Mission (SBM) in urban areas
• USD 650 Billion will be required for urban infrastructure over the next 20 years
RAILWAYS
• Contributes 2% to GDP
• Investment of $131 billion in the next 5 years
• Dedicated Freight Corridor are under construction PAN India
• Eastern Freight Corridor – 1840 KM
• Western Freight Corridor
1540 KM
10 Investment potential of $4.7 Trillion through Make in India
Ref : Make In India Program,India
DEMAND DRIVERS (Contd)
DEFENCE
• Budget allocation ~$35 Billion in 2016-17
• 60% Defence requirement is met through imports
• 100% FDI under various options
• Contractual offset obligations worth $4.5 billion due in next 6 years
ROADS & HIGHWAYS
• Contributes 6% to GDP
• Announced Projects include Bharatmala, Sagarmala and other NHAI projects covering Length : ~44000 (Km) @ Estimated Cost: ~$97.20 billion
• Highway traffic to reach around 13,000 billion tonne km (btkm) by 2030
RENEWABLE
• Renewable energy contributes 14.7% of the total installed capacity
• 175 GW of renewable power by 2022
• 100GW of Solar, 60 GW of Windpower and 15 GW of Biomass and small Hydro
• India's Annual Solar installations to grow over 4x by 2017
OIL & GAS
• Refining capacity to increase from 231 MT to 257 MT in next 5 years
• Completion of gas grid construction of 15,000 km of gas pipeline underway
• 326 cities to be connected under city gas distribution network (CGD) by 2022
• RLNG capacity to be increased from 22MT to 48 MT
11 Investment potential for Infrastructure estimated at $1.07 Trillion
CHALLENGES
12
• Finance Cost
• Cost of Infrastructure and Logistics STRUCTURAL
DEFICIENCY
• Availability of high grade Iron Ore, Coking Coal, Fluxes
RAW
MATERIAL
• Land and Labour Laws
• Ease of Doing Business
REFORMS
• Threat from imports at Predatory Pricing IMPORTS
Thank You