National Steel Policy (NSP) 2017 - Objectives, Highlights, Vision & Development

Understanding the National Steel Policy

The National Steel Policy, unveiled in 2017, seeks to increase India's steel production capacity to 300 MT by 2030. The policy envisions enhancing domestic consumption, producing high-quality steel, and making the sector globally competitive.

Vision of the National Steel Policy, 2017

The vision of NSP 2017 is to establish a globally competitive steel industry that fosters growth across sectors.

The policy aims to create an environment that facilitates:

1. Self-sufficiency in steel production through policy support and guidance to MSME producers of steel, the private sector, and central public sector enterprises, and encouraging sufficient capacity additions.
2. Development of internationally competitive manufacturing capabilities.
3. An increase in the domestic demand for steel.
4. Cost-efficient production and domestic availability of iron ore, coking coal, and natural gas.
5. Investment in overseas asset acquisitions of raw materials.

Objectives of the National Steel Policy

The key objectives of the NSP 2017 are outlined below.

• Increase the crude steel capacity to 300 MT by 2030-31.
• Boost per capita consumption of steel to 160 kg by 2030-31.
• Fulfill the entire demand for high-grade automotive steel, special steels, and alloys, and electrical steel for strategic applications through domestic production by 2030-31.
• Become a net steel exporter by 2025-26.
• Increase domestic availability of washed coking coal to reduce import dependence on coking coal to 50% by 2030-31.
• Develop and implement quality standards for domestic steel products.
• Guide the industry to become a global leader in energy and raw material-efficient steel production by 2030-31.

Background of the National Steel Policy

The steel industry is a vital component of any industrial economy. It finds extensive applications in various sectors such as construction, power, infrastructure, aerospace, consumer products, industrial machinery, and more. The steel industry has robust forward and backward linkages in terms of material flows and income generation.

The Indian steel sector has seen significant growth in recent years, becoming the third-largest producer of steel worldwide. It contributes approximately 2% to the country's GDP and employs about 500,000 people directly and about 2 million people indirectly.

• A thriving steel industry is critical for a nation's rapid economic growth and industrial development.
• Before deregulation in 1991-92, the country's steel capacity was only 22 MT. Since then, India has grown to become the second-largest producer of steel with a production of 91 MT and a production capacity of 122 MT in 2015-16.
• India's competitive advantage in steel production is largely driven by the indigenous availability of high-grade iron ore and non-coking coal, two critical inputs of steel production. Other factors include a large consumer market for steel, a youthful workforce with competitive labour costs, and a robust MSME sector.
• The sector significantly contributes to the growth of the manufacturing sector.

Some interesting facts related to steel production include:

• China is the world’s largest producer of crude steel, accounting for more than 51% of production.
• In 2019, India surpassed Japan to become the second-largest producer of crude steel.
• Other countries in the top ten steel producers include the USA, Russia, South Korea, Germany, Brazil, etc.
• These facts are published by the World Steel Association.

The pie chart below shows the country-wise share in steel production for the year 2019:

Image courtesy of worldsteel.org

Development of the Steel Sector in India

The economic liberalisation of the 1990s significantly contributed to the rapid growth of the steel sector in the country.

• The requirement for licensing for capacity creation was abolished, except for certain locational restrictions.
• The steel sector was privatised and removed from the list of industries reserved for the public sector.
• Foreign equity investment up to 100% was granted automatic approval.
• Price and distribution controls were removed, leading to increased efficiency and competitiveness in the steel industry.
• Import duty was significantly reduced, and other restrictions on external trade were lifted.
• Today, India is a net importer of finished steel goods as domestic requirements have to be met.

Highlights of the National Steel Policy, 2017

The significant highlights of the NSP are as follows.

• In government procurement, priority is given to domestically manufactured iron and steel products.
• The policy's focus areas include import substitution, raw material securitisation, enhancing steel consumption, and increasing production efficiency.
• The policy recognises the potential of the MSME sector and encourages it to adopt energy-efficient technologies to improve overall productivity.
• It envisions the development of internationally competitive steel production capabilities, enabling foreign investments, cost-efficiency in production, and asset acquisitions of raw materials.
• In government procurement, the manufacturer must self-certify that the product has been domestically produced. If required, the manufacturer should provide proof of the same.