As is well known, contrary to most predictions, the steel demand has fallen in the South East Asian markets due to the currency crisis gripping these economies. Although steel production is expected to increase further in 1998, slackening demand in South East Asia may lead to a highly competitive global market with possible drops in prices in the near future.

Such developments today hold a lot more significance to the Indian steel industry than these did in the past. As the trade barriers have been lowered, the Indian producers are not only trying to reach out to the world while facing competition from imports in the domestic market.This is substantiated by the fact that Indian exports of iron and steel increased from 0.3 million tonnes in 1991-92 to over 2 million tonnes in 1996-97 and imports have reached nearly two million tonnes from an average of around a million tonne in the early 90s'.

The steel industry has done well in the post reform period. Finished steel production shot up to reach 22.7 million tonne in 1996-97 after a period of stagnation during 1991-92 to 1993-94, when finished steel production had remained more or less at about 15 million tonne a year. It is important to note that the share of the private sector in the overall production has grown from 50.9 per cent in 1992-93 to 62.5 per cent in 1996-97.

Apparent consumption of finished steel also increased from 14.84 million tonne in 1991-92 to 22.49 million tonne in 1996-97. The growth rates in steel production and consumption during 1996-97, which have slowed down since, are mainly external and due to lower demand from the end use sectors. There has been a slowdownin industrial production and construction activities. The cash strapped corporate houses has reported lower profits in 1996-97, although there seems to be some improvement in the first half of 1997-98, as per available reports. The statistics for November have also shown a slight improvement.

According to the apex financial institutions, credit outflow from the banks and financial institutions to the industry has increased. The government has taken major steps to increase flow of money into the economy. Also, as infrastructure development gets into top gear, demand for steel will certainly increase.

The steel industry, high on inventories, is taking steps to boost exports. This year, exports of iron and steel are expected to touch nearly 3 million tonne. The iron and steel industry has for long envisaged formation of an Steel Exporters' Forum to promote export of iron and steel from India. The Ministry of Steel is taking necessary steps to formalise this long felt need.

The Indian steel industry willhave to adopt a long term and coherent strategy to consolidate its position to gain strength. It will have to focus on niche markets, develop customised products, invest on research and development and be cost efficient.

The industry will also have to establish superiority in quality of products and services offered. Both the issues of quality and efficiency are inextricably linked with technology upgradation. India has traditionally suffered a technology gap in this area vis-a-vis other developed countries. However, the good news is that the technology gap is being gradually reduced as the older plants are getting modernised and the new plants are adopting state-of-the-art technologies.

The role of capital funds gains importance in this context of improving competitiveness of the steel industry. We have to make use of the natural resources, capital equipment, technological process and human resources to the maximum advantage possible. India is a country of natural resources. We have abundance of ironore and plenty of coal both coking and non coking. Our steel producers have the advantage of some of the lowest cost iron ore in the world. The government has paid adequate attention to improve quality and supply of coking coal to our steel plant.

However, lot more effort will be required if we are to reduce dependence on imported coal. It all depends on how best our resources can be benefited and utilised economically in the best interest of the industry and the country.

Till Recently, we were depending heavily on imported scrap. However, development of sponge iron industry , which uses domestic resources mainly, had led to a substantial substitution of imported scrap by sponge iron. Technological self reliance is a must for the country and our available human resources should be utilised in the field of R&D for technological advances in the steel industry. The government will play its role here but it is upto the industry to contribute in larger measure and come out with concrete suggestions on theareas which should be covered for R&D projects. The industry should run R&D activities on fully commercial lines so that these can be sustained in the long run without having to seek any other support.

The author is Secretary, Union Ministry of Steel. His views have been taken from Minerals & Metals Review's Golden Jubilee Issue, published recently