An alloy of iron with small amounts of carbon; widely used in construction; mechanical properties can be varied over a wide range.

Exports from India

The iron and steel sector in India was set up to meet her domestic needs and support infrastructure development of the nation. Iron and steel exports from India started after 1964, the first time India's supply dominated her domestic needs. Though the Indian exports are quite vulnerable to domestic demand conditions, the export market has been doing reasonably well in the past few years, with FY03 seeing an increase of more than 100% over the previous year. The increase in exports to Asia (approx. 227%) and America (105%) has contributed to this massive growth. In spite of the fact that India has done well, it still faces stiff competition, holding the twenty-fifth rank in the global export markets for iron and steel and the twentieth position for iron and steel articles in FY03. Also, the share of India is very low in most of its major markets (around 3%).

The largest importer of iron and steel from India is China and that for iron and steel articles is USA. It is interesting to note that whereas China holds the top position in the Indian iron and steel export markets, it doesn't even figure in the top fifteen destinations for iron and steel articles exports from India.

Observers

In India, apparent steel consumption increased by 6.5% in 1999 and a further increase of 7% is expected in 2000. Activity in steel consuming sectors like consumer durable goods, automobile and industrial machinery are growing a rates between 11.5 and 13.6% this year, while activity in the construction sector, which is the single largest consumer of all steel products, is expected to grow by 7%. Crude steel production that increased by 10.8% in 1999 should continue to grow another 10% in 2000. Steel exports should increase by 15%, and. total steel imports are expected to increase by 10%.

Global Market

The iron and steel sector is highly diversified, with products ranging from basic raw materials to semi-finished and finished products. The present study integrates on two broad categories- iron and steel and iron and steel articles. Iron and steel includes a wide category of products such as alloys, bars and rods, flat-rolled products whereas iron and steel articles mostly comprises of consumer goods like tables, tubes, pipes, track etc. Germany holds the top position for the aggregated iron and steel products (iron and steel and iron and steel articles) worldwide as a supplier. The total size of the world market for iron and steel stood at US$ 117.5 bn for FY03. The market is relatively concentrated with the top ten exporters contributing for more than half (57%) of the entire exports. The major exporters have been Germany, Japan and France with a share of 10.1%, 9.4% and 7% respectively.

The total size of the world market for iron and steel articles for FY03 was valued at US$ 88.6 bn. Germany has been the leading exporter (13.1%) followed by USA (11.6%) and China (9.2%). The market for iron and steel articles is more concentrated with the top exporters contributing around 66.6% of the total exports. The major developed countries have been dominating the world market for both the categories, indicating that higher capital availability is crucial for this sector's development.

Future Prospects

The sector has been facing tariff and non-tariff barriers (in the form of anti-dumping investigations, safeguard measures etc.) from various countries. USA and EU are the two regions where the iron and steel trade has seen the most persistent non-tariff barriers. Mexico and Venezuela have raised tariffs as high as 25% and 35% respectively. In such times when the exports are being hit, the cheap imports of seconds and defectives have adversely affected our domestic sector.

However, the medium to long term prospects for the Indian iron and steel export sector look promising. USA repealed the safeguard measures on steel imports as per a WTO ruling. Further, China has emerged as the most vibrant economy for both domestic production as well as consumption. With a high growth rate, China is expected to contribute around 58% in the anticipated global consumption in the year 2004. The increase in consumption in China can be attributed to the infrastructure developments, the spurt coming in part from the next Olympic games, to be held at Beijing. These are opportunities that India should look to capitalise on. India should also capitalise on its advantage as a supplier of galvanised products. The galvanised products are value added products that are mainly used for roofing, grain storage purposes and technical goods like AC, automobiles etc, and India has a dominant position in the world market for this product.

With the prices firming up and the global economy on a gradual recovery, the Indian export market is expected to expand soon. Given the cheap availability of inputs (raw materials, manpower) and the various incentive schemes, the Indian exporters have immense opportunities not only to increase their share in the existing markets but also to diversify into other markets. Iran, Vietnam (for iron and steel) and Spain, Indonesia (for iron and steel articles) registered high growth rates during FY98-FY03, exceeding 80% and 40% respectively, indicating other possible potential market destinations that await India's exploration.