The story of economic growth has long been written in steel and concrete. From the Industrial Revolution in the 19th century in America to the post-war boom in Japan, nations rose on the strength of these steel factories. Today, India’s economy is witnessing a surge, an impressive 8.2 per cent real GDP growth on the back of the industrial uptick of 5.9 per cent.
Steel, a major sector contributing 17.92 per cent to growth, is adapting to an industrial landscape increasingly influenced by climate change and eco-friendly technologies. This shift is fuelling demand for innovative materials like stainless steel, lithium, nickel, and cobalt.
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This raises a pertinent question, will traditional industries like coal, steel, and cement remain the growth drivers, or are emerging, sustainable commodities set to lead the way into the future?
A pivotal shift in demand drivers
Between 1980 and 2020, while carbon steel demand grew at a steady 2.42 per cent, a sleeker and more hygienic metal emerged – stainless-steel, which surged at 5.13 per cent, showing a shift in material preferences.
Initially confined primarily to kitchenware applications in India until the late 1980s, stainless steel has since undergone a remarkable diversification in its utilisation. This shift is evident in the changing demand drivers from FY 2021, with process industries at 25-27 per cent, architecture at 18-20 per cent, and automotive and railway at 8-10 per cent. Stainless-steel’s sustainability, longevity, and affordability drive this shift.
Stainless steel’s sustainability is evident in its inert nature, which prevents contamination, making it ideal for food processing, storage, and service. Its corrosion resistance and ability to withstand high temperatures are critical for green energy technologies like solar panels, biomass energy, and carbon capture systems. With cent per cent recyclability, stainless steel stands out as an environmentally friendly material.
Its durability and resistance to oxidation make it essential in water management and electric vehicle components. Moreover, its strength and ductility make it suitable for load-bearing structures such as bridges.
The long, maintenance-free lifespan of stainless-steel also offers significant cost savings of up to 30-40 per cent compared to other metals, making it an economically viable and sustainable choice.
Solving twin challenges: Production and exports
India’s stainless-steel industry stands at crossroads, facing the dual challenge of balancing rising domestic consumption with increased production while driving innovation to stay competitive. Over the last five financial years, the consumption of finished stainless steel in India has grown at a CAGR of 4.36 per cent. Globally, stainless-steel production is expected to rise by 4.4 per cent in 2024, reaching 60.53 million tonnes (mt), driven by demand across infrastructure, consumer products, and energy sectors.
To meet this demand, India aims to boost production capacity from 6.6-6.8 mt to 30-32 mt by 2047—a 4.5-fold increase. This expansion is essential for both domestic needs and global export market presence.
Enhancing cost competitiveness through lowering input costs is key to growth. Raw material security is vital, and India’s recent budget, exempting customs duties on 25 minerals, aligns with this goal. Learning from Indonesia, which controls 40 per cent of global nickel reserves and is now a top stainless-steel producer, India can strategically strengthen its raw material base. The proposed reduction of customs duties on ferro nickel and ferro scrap will further make raw materials more affordable and boost global competitiveness.
From Europe to India, innovation in stainless-steel is unlocking new avenues for growth. The European Space Agency’s use of a stainless-steel 3D printer and IIT BHU’s work on orthopaedic implants both highlight how cutting-edge research and development can drive industry expansion and open new markets.
By focusing on production efficiency, securing raw materials, and fostering innovation, India’s stainless-steel industry can bridge the production-consumption gap, enhance its export potential, and solidify its role in the country’s industrial future.
Charting the course: Elevating stainless steel to core industry status
Stainless steel’s growth is challenged by raw material scarcity and high energy costs. However, recent policy changes, like reduced customs duties and the Critical Minerals Mission, offer a positive outlook.
The proposed fiscal push to expand high-grade steel production must also apply to stainless steel, enabling India to meet domestic demand and lead global exports. Government initiatives, such as the ₹11.11 lakh crore infrastructure boost and funding for private sector R&D and advancements in energy storage and nuclear technologies, highlight key opportunities for enhancing stainless steel’s role.
Recognising stainless steel as a core industry is essential to align its rising significance with targeted support. This move would significantly benefit domestic producers and encourage consumers alike to choose stainless steel. Despite its higher initial costs, stainless steel’s lower life-cycle costs—including installation, maintenance, and residual value—make it more cost-effective than alternatives.
This formal acknowledgement, coupled with fiscal support, could position stainless steel as a cornerstone of India’s industrial growth, contributing significantly to a self-reliant and advanced economy.
(Singh is Former OSD to Union Finance Minister and Kathuria, Director at Synergy Steels)
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Published on August 31, 2024
https://www.thehindubusinessline.com/markets/commodities/cleaner-metals-stronger-economies-how-stainless-steel-is-reshaping-demand-drivers-of-future/article68587087.ece
