In the wake of COVID-19, the Indian steel industry faced a sharp decline in demand, especially in the month of April. However, phased relaxation in lockdown did allow some operations to resume in the industry, which steadily increased the fallen retail rates and led to export uptick. Ever since then, the market has visibly recovered from the impact of COVID-19, as many steel plants have resumed operations at full capacity.
Moreover, since India has a relatively low per capita steel consumption, initiatives like Make in India have also been incredibly lucrative for the industry. Giants in the steel industry have already doubled efforts to boost steel production capacity, with major investments pooling in from both government and private sectors.
Even the World Steel Association posited a slow rise in steel demand for India, along with other ASEAN and MENA countries. Not to mention, a boost in need for rural infrastructure in India has increased the domestic demand as well. Given the upcoming boom, steel enterprises should prepare in advance to fully enjoy the industry bloom.
Invest in technology
From IoT devices to AI, new and innovative technology will undoubtedly drive the boom in the Indian steel industry. Not only will technological applications provide valuable business solutions, but they can also improve efficiency across the entire system. As IoT devices facilitate interactions in real-time, they can connect various units in a plant efficiently and enhance the productivity manifold.
Besides, as the Indian steel industry transforms digitally, businesses need to adopt technological advancements readily with suitable infrastructure. Because in the future, growth in steel business will rely heavily on technology deployment.
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Growth in the Indian steel industry in domestically driven, as labour is readily available at competitive rates. However, even with optimal output, productivity will likely remain at the lower end. Especially as several nodes in the value chain, from steel procurement to supply, remain undercapitalised with a lack of skilled professionals.
To combat such challenges, inhouse talents should receive the appropriate training in the guidelines defined by BIS, the National Standard Body of India. Especially now, with faster technological integration across the value chain, the older workforce will require upskilling. But more importantly, the industry needs to make room and employ a technologically adept talent pool systematically.
Optimise supply chains
Because steel distribution network is widely fragmented, systematic complexity can often hinder productivity. But as mentioned earlier, technological integration will prove vitally important to optimise the complicated distribution networks. Efficient digitalisation can significantly reduce the costs across the supply chain and streamline different processes; a definite way to boost competitiveness in the market, which can increase productivity furthermore.
Additional Read: Is Supply Chain Financing Part of Growth Plan in India?
In contrast to conventional operations, digitisation of supply chains can overcome common bottlenecks by improving connectivity, both horizontally and vertically across companies. However, the digital transformation will not come without costs. And as business cash flow suffers in the wake of COVID-19, external finance may be the only way forward.
At Tata Capital, you can find a bespoke solution tailored to your unique business needs with relative ease. Avail of easy business finance to fund innovative solutions effortlessly. Get lucrative loan terms with quick and minimal documentation. For further details, connect with us today.