Rising Steel Imports Under FTA In India Pose Challenges For Domestic Steel Industry

03 March 2023

The local supply of raw materials such as iron ore and cost-effective labor has fueled development in the Indian steel industry. As a result, the steel industry has been a significant provider of India's industrial output. The Indian steel sector is cutting-edge, with state-of-the-art steel factories.


Rise in steel imports


The rise in finished steel imports is especially problematic for the Indian steel industry because FTA nations sell it at rates lower than their domestic prices, a form of dumping. The ISA has been vocal in its worries about the effect of cheap imports on local industry and has advocated for more significant safeguards. At a time when high input costs have reduced margins and left little space for price cuts, Indian steelmakers are confronting increased rivalry from cheaper imports.

Foreign steel is increasingly making its way to Indian coasts as significant manufacturers such as Japan, South Korea, and Vietnam send surplus output to India in the face of a downturn in important markets such as Europe and the United States. Steel prices rose 5% in January to a three-month peak of Rs. 56,900 per tonne. The research company ascribed the increase to "export tax removal and rose in raw material costs" in its most recent report.


What are the issues confronting India's steel industries?


The steel business is no exception. ERP has aided industrial sectors across the board since its inception. Steel sectors are enjoying the advantages of the system's flexibility as it is upgraded daily. Steel industries frequently encounter several manufacturing efficiency difficulties. Overproduction, high energy costs, material prices, production timing, and supply availability are the most prevalent obstacles in steel production. Here are five distinct challenges in the steel industry:


The intensity of Labor

The steel business is one of the most labor-intensive industries because it needs many people to conduct our everyday operations. As a result, human resource administration becomes extremely difficult. As a result, creating tailored ERP software to arrange human resources is efficient.

Product supervision and quality assurance

One of the most important elements of manufacturing sectors is inventory. Failure to handle inventory properly results in the loss of the entire company. Poor stocking management can have a direct impact on product quality. Steel demand in India and around the globe has skyrocketed due to increased demand for infrastructure, real estate, and cars, among other things. Inventory management is required to provide superior services and quality steel goods.

Transportation and supply chain management

Steel sectors have one of the biggest and heaviest inventories, making delivery more difficult and expensive because most steel factories in India are inland. Furthermore, steel logistics necessitates a robust supply system due to the volume of products provided. Because of the high supply demand, controlling and optimizing logistics is vital in steel production. Lighthouse ERP monitors transportation and the supply chain, improving the movement of steel products and raw materials.

Production Planning

Steel industries frequently encounter several manufacturing efficiency difficulties. Overproduction, high energy costs, material prices, production timing, and supply availability are the most prevalent obstacles in steel production. If handled correctly, these hurdles can result in higher product quality, loss of basic materials and resources, and a lower ROI. Planning production to use resources efficiently and create just the correct quantity of goods is essential. Lighthouse ERP aids production planning by providing a comprehensive perspective of the complete process.

It keeps track of raw material supply and monitors production progress. A unified system for quickly getting all information is hugely advantageous for steel companies in developing effective production strategies.

Manufacturing strategy Business expansion

Because of the numerous processes and large company size, ERP in steel production sectors must focus on daily routine duties and thus cannot focus on development. Growing the company may cost them much more than anticipated, as they must integrate different systems, hire workers, and teach them to operate them. Spending this much cost may or may not be productive and, if not prepared for, could result in significant losses.

Execs and business leaders can concentrate on development rather than process tracking by choosing a comprehensive and advanced ERP system, such as Lighthouse ERP. Lighthouse ERP allows steel industries to expand indefinitely because all designs are automated and linked via a cloud platform, eliminating the need to employ additional methods. Furthermore, it enables all workers to obtain data and function from any location.


Key Issues Facing the Indian Steel Sector


  • Capital Shortage

Significant capital investments are required in the iron and steel sector, which a developing nation like India needs help to afford. Many of the public sector integrated steel factories were built with the assistance of foreign funding. This significantly raises the expense of steel building construction.

  • Lack of Technology

Throughout the 1960s and up until the energy crisis in the mid-1970s, the Indian steel sector was highly technologically efficient. This technology was mainly imported from other countries. However, after the oil crisis, the steel factories' profit margins were diminished by a steep increase in energy prices and the cost of other inputs. As a consequence, investment in technological advancements has decreased.

As a result, the industry lost its technological advantage and is now far behind advanced nations in this respect. Material value output in India needs to improve.

  • Low potential usage

Steel has an inferior potential application. Rarely is the possible utilization more significant than 80%. Several reasons contribute to this, including protests, lockouts, raw material scarcity, an energy crisis, inefficient government, etc.

  • Units of the public sector are inefficient

Most public sector entities are beset by inefficiency caused by high societal overhead expenditure, lousy labor relations, inefficient management, under­utilization of capacity, etc. This impedes the correct operation of the steel factories and results in significant losses.

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