Indian Steel Industry: Fill & Download for Free

China and Chinese companies are so deeply ingrained in the world economy that this will be a futile, nigh impossible venture.Just look at their two largest companies — Tencent and Alibaba Group.[1]And how they have created a diverse portfolio of Indian investments.Shall we just ban Paytm, Flipkart, Zomato, Swiggy, Ola, BYJUs, etc?Who’ll deliver your food? Who’ll get you a rented cab? Are you ok with just Amazon being the sole e-Commerce website in India (remember, Myntra is owned by Flipkart too.)What happens to the mid-range smartphone market? And consequently, to the “Digital India” push if you ban OnePlus, Oppo, Vivo, Xiaomi? Remember that Indian brands like Micromax have not been able to deliver quality and initiatives like Freedom 251 were a national scam.Chinese firms have invested over $4 bn in Indian startups.Chinese tech investors have put an estimated $4 billion into Indian start-ups. Such is their success that over the five years ending March 2020, 18 of India’s 30 unicorns are now Chinese-funded. TikTok, the video app, has 200 million subscribers and has overtaken YouTube in India. Alibaba, Tencent and ByteDance rival the U.S. penetration of Facebook, Amazon and Google in India.Chinese smartphones like Oppo and Xiaomi lead the Indian market with an estimated 72% share, leaving Samsung and Apple behind.There are three reasons for China’s tech depth in India. First, there are no major Indian venture investors for Indian start-ups. China has taken early advantage of this gap. Alibaba’s 2015 investment in 40% of Paytm, a digital payments platform, paid off barely a year later when in November 2016, the government of India demonetised its large currency notes and simultaneously promoted a move to a cashless economy. Paytm benefitted from Alibaba’s superior fintech experience, which it applied to India seamlessly, making it a dominant player.Banning games and utility apps are fine. They will not cause many inconveniences to the people.But banning entire corporations, especially where there are no other global or local alternatives is not feasible.India is a small trade partner for China, but China is a major trade partner for India.China is India’s #1 Import Source and #3 Export destination.[2]However, for China, these numbers are insignificant.[3] Indian imports make up only less than a percent of its total, and exports to India less than 4%.Although the trade deficit between the two nations is decreasing, it is still substantial.[4]India's trade deficit with China fell to USD 48.66 billion in 2019-20 on account of decline in imports from the neighbouring country, according to government data.Exports to China in the last financial year stood at USD 16.6 billion, while imports aggregated at USD 65.26 billion, the data showed.The trade deficit between the countries was at USD 53.56 billion in 2018-19 and USD 63 billion in 2017-18.The main imports from China include clocks and watches, musical instruments, toys, sports goods, furniture, mattresses, plastics, electrical machinery, electronic equipment, chemicals, iron and steel items, fertilisers, mineral fuel and metals.However, with proper strategic planning, India can substantially reduce its dependence on China in the long-run.Let’s take steel as an example:India produced about 110 million tonnes of steel in 2019[5]of which about 10–15% is exported. Exports fell substantially in 2018 as other large producers, especially China, boosted their exports[6]At the same time, India imported about 9 mn tonnes of steel, majorly from China, S Korea, and Japan.[7]One might ask then, why does India both export and import steel? We are obviously producing enough to meet internal demands (exports>imports). The answer lies in the “quality” of steel. India’s major steel import is “value-added”, high quality steel, especially for the auto sector.To produce such high-grade steel, the industry requires,a) cheap raw material (iron ore)b) cheap powerc) cheap landd) cheap financingIndian steel industry is really uncompetitive.[8]The Indian steel industry is often regarded as uncompetitive globally. In 2016, World Steel Dynamics ranked India second in terms of cost of conversion of iron ore to steel, after Ukraine. Indian mills were found to be more cost efficient in converting iron ore to steel than their counterparts in China, Japan or Korea. Most Indian integrated steel producers ranked within the top 35 steel mills globally.The answer to the dichotomy can be found in a report by the National Institution for Transforming India (NITI Aayog).19 The report explains a USD 80–100 cost difference in the table below:Almost 30–40% of the cost disadvantage comes from higher financing costs.Steel is a capital-intensive sector. Nearly INR 7,000 crore is required to set up 1 tonne of steel-making capacity through the greenfield route. Naturally, the cost of financing any expansion or new steel capacity is usually through borrowed capital. And in India the cost of finance is extremely high compared to the cost of finance in developed countries such as China, Japan and Korea. This adds about USD 30–35 USD to the final cost of steel.Moreover, steel demand is cyclical. So, during a downturn, the return on investments gets eroded. From 2004–2011, steel demand increased at a fast pace. This prompted most steel makers to expand existing capacities. However, the Indian steel industry faced a severe downturn between 2014 and 2016. This eventually resulted in many steel makers facing bankruptcy proceedings in 2018. The industry, in fact, is yet to resolve all the bankruptcy cases. Today, financial institutions have become wary of lending to the sector.In conclusion, therefore, a large share of the challenges that the steel industry has faced since 2014 can be traced to the extremely high finance costs or cost of borrowed capital. Although India’s Reserve Bank has lowered the policy repo rate five times and by 135 basis points in 2019 alone, the cost of capital in India still remains significantly high and Indian steel makers continue to face a relative disadvantage vis-à-vis their competitors from the developed world.The government red-tape, lack of proper infrastructure, and outmoded logistics and transportation facilities add a lot of non-essential costs to the tally.In terms of logistics, our iron ore deposits are usually inland, meaning that only railways is capable of transporting the raw material to the plants. Add to that the fact that frieght services in India usually are higher to cross-subsidize the loss-making passenger services, and you have another set of extra costs loaded on.This is just an example of how inefficient planning, bureaucracy, and sub-standard infrastructure can make domestic products non-competitive with imports.Unless the Indian government and the relevant ministries take a long-term, strategic view of the essential industries, we will have to depend on imports to meet demand.However, if done right, we can become a self-dependent economy for almost everything except oil.Footnotes[1] https://www.gatewayhouse.in/wp-content/uploads/2020/03/Chinese-Investments-in-India-Report_2020_Final.pdf[2] https://wits.worldbank.org/CountryProfile/en/Country/IND/Year/LTST/Summary[3] https://wits.worldbank.org/CountryProfile/en/Country/CHN/Year/LTST/Summary[4] India's trade deficit with China reduces to USD 48.66 bn in FY20[5] Iron & Steel Industry in India[6] https://legacy.trade.gov/steel/countries/pdfs/exports-India.pdf[7] Enhanced global steel trade monitoring[8] https://www.pwc.in/assets/pdfs/consulting/technology/the-indian-steel-industry-growth-challenges-and-digital-disruption.pdf

On a National Basis :-The Tata Family have given us Educational Institutions, Industries, Quality Airlines (Which we ruined), Reputable Retail Items like Watches (Titan), Jewelry (Tanishq) , the first decent instant pasta i have ever tasted (Q), Indias Top Quality controlled Service Industry (TCS), Indias Flagship Hotel, A Steel Industry etc.The Birlas have done quite a lot too Planetariums, Museums, Schools, Institutes of higher learning even Hospitals and Temples.Others on a regional basis include :-Shanti Gears - Subsidized healthcare, Testing, Quality Doctors at Rs.50/-, Canteen with subsidized meals for allPSG group - EducationPulla Reddy Group - AP philanthropistsAzim Premji - WiproShiv Nadar - HCLAre some businessmen i know

Forget all these other answers. From the early 1700’s till 1947, India was ruled by the British. After Independence, India quickly Rose to power. TATA, a major Indian company stated that they wanted to buy every single British company. To date, they have bought Jaguar, Land Rover, and basically run the entire British steel industry through TATA steel.Nothing says bitch please like literally owning your colonial masters.