An avid golfer, a cricketer by passion and a talent spotter in the game, K Shankar is also a business and strategy consultant. With over 20 years’ experience, Shankar has served a wide spectrum of clients across industries both in India and around the world. An engineer from Bangalore University, Shankar is responsible for assessing market opportunities & advising clients on investment ecosystems to deliver successful business results. Over the last 23 years at Feedback, Shankar has been an integral part of all strategic engagements involving setting up new business operations in India. In recent years, he has played a key role in bringing together partnerships between Indian and International firms. Shankar brings in a strong strategic perspective to clients. Shankar is widely travelled and serves on the boards of listed companies. He is a regular speaker at events and conferences concerning various industry sectors. In his spare time, he teaches in management schools and enjoys mentoring students.
The World Steel Association states that global steel demand increased by 0.2 percent to 1,501 Mt in 2016 after a contraction of -3.0 percent in 2015. In 2017, it expects global steel demand to grow by 0.5 percent and reach 1,510 Mt. The net conclusion – steel industry is reeling under a weak demand-led tailspin and is further compounded by oversupply situation from select geographies. This is not an easy situation and could take 3-4 more years to improve unless engineered proactively.
Around the world, steel industry fortunes are directly linked to the capex plans of industry, infrastructure investments, housing, railways, automotive sector performance, etc. While government spend on capex will be high, it is the private sector capex spend that allows for steel suppliers to nurse acceptable margins. The private sector capex and investment in core sector around the world is extremely weak at this point in time and is going through a certain rebalancing like never before.
India, the third largest producer and a top consumer of steel, is impacted too. Steel industry accounts for almost 2 percent of India’s GDP. This industry also has the highest debt exposure with local financial institutions. A variety of issues have decelerated the Indian steel industry:
The national policy had to consider all these issues and the global situation to articulate a new direction for the steel industry. The policy is short on any concrete measures that could help the immediate situation. While in the long term, it will aid in capacity addition, but as John Keynes says “in the long term we are all dead “.
Let’s evaluate what the policy missed:
The National Steel Policy 2017 has missed a trick or two. It has not conceived all the triggers and is therefore a bit off target.
The thoughts and opinions shared here are of the author.
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