India is the fastest-growing major economy in the world – is this growth sustainable and what does it mean for the prospects of the country’s steel industry?

India’s growth has proven to be impressive and resilient. Its GDP growth has been fantastic, at 8.2 per cent in 2023 and 7 per cent plus for three consecutive years. Global ratings agencies remain confident that India’s growth story is intact and our own experience at the heart of the country’s steel sector suggests the same.

Take per capita steel consumption. At 95kg, it is far below the global average which is more than two times greater than India’s. As a large, fast-growing economy with huge infrastructure development needs, it’s entirely reasonable to foresee a scenario where the gap between India's per capita steel consumption and the global average will significantly narrow as the country continues to advance in the coming decades in order to become self-reliant.

To meet this rising steel consumption, we expect that domestic production capacity will grow from 160 million tonnes today to 230 million tonnes by the end of this decade. We intend to capture our share of this anticipated demand growth and significantly grow our steelmaking capacity, reflecting our confidence in the long-term growth trajectory of the country.

Initially, we will increase annual capacity at our Hazira plant from 8.6 million tonnes to 15.6 million tonnes. This project is well underway and will complete in 2026. We don’t intend to stop there however and have plans to further increase capacity in Hazira to at least 20 million tonnes, possibly beyond, and longer-term we have options on the east side of the country for potential greenfield growth. We intend to maximise the opportunity India presents, and to play an important role in its economic growth.

What are the major drivers of steel demand and consumption in India?

My starting point is that India today is where China was, say, fifteen or twenty years ago in terms of development. Based on the industrial expansion and economic advancement we are witnessing, I’d pick out three major areas where we see strong growth.

First is the massive infrastructure spend being deployed to build bridges, roads and railways across the country. This year alone, the Indian government’s infrastructure outlay is around USD135 billion, up by 11% as compared to  the previous year.

Second, India’s automotive industry, which is doing phenomenally well and expected to continue growing in the region 8per cent annually.

A third driver is the steel that will be needed for India’s energy transition, especially for solar and wind energy infrastructure, as India pursues its target to reach 500GW of renewables capacity by 2030, from a current level of around 150GW.

What effect is India’s economic development having on the type of steels in demand?

India is the second largest producer of steel globally, but it still imports large volumes of high-value specialty steels. As India pursues its objective of becoming a USD5 trillion economy by 2027, and one that is more self-reliant, the trend to substitute imports with domestically produced advanced steel materials in all the major steel-intensive sectors will further spur demand for value-added steel.

The auto sector is a good example. Not only are we seeing volume growth here, but Indian automotive manufacturers increasingly want more sophisticated, lightweight, advanced and ultra-high-strength steel products that reduce tailpipe emissions and make cars safer. Today, much of this steel is imported, there is a real opportunity for us and so the expansion project underway in Hazira includes a 2 million tonne automotive complex specifically designed to offer the most demanding automotive grade steel. And, as the Indian EV market grows, beyond the electrical steels needed for battery packs, the need for charging infrastructure is immense, with premium steels having an important role to play.

We are also seeing increasing demand for steels for the renewable energy sector, as the country adds solar and wind power at a staggering pace to meet the national target. And again, we intend to capture the opportunity on both the volume and quality aspects. We’re introducing Magnelis® into our product range. It’s a steel with a metallic coating made of zinc, aluminium and magnesium that guarantees corrosion protection for up to 25 years, the typical lifetime of solar panels – so the steel needed to mount them needs to last as long.

We are ambitious with our growth targets. We want to achieve a 20% market share in flat products, 30% in value-added steels and 40% in the automotive sector.

Growth carries with it additional responsibilities, particularly where the climate is concerned. How do you balance that need to meet growing demands with goals around carbon emissions?

It’s a difficult challenge but we are conscious that our growth needs to be responsible. We start from a reasonably good place – and in fact have already reduced our emissions intensity by one-third since 2015 - in that around two-thirds of our production is currently from the DRI-EAF route, which is gas based and hence lower carbon intensity. This means our carbon intensity per tonne of steel produced is one of the lowest of Indian integrated producers today.

But we want to improve and have a target to reduce our emissions intensity by 20 per cent by 2030. We’ll achieve this by improving operational efficiency, using more scrap – today the only scrap we use is from our own steel plant – and tapping into renewables for our electricity needs. Our own 1GW renewables project – which combines solar, wind and hydro-pumped storage to overcome the intermittent nature of renewable power - comes on stream in two months. It will provide 20 per cent of our current electricity needs, so a good start, and something to build on. We intend to develop further renewables projects and aim to source 100 per cent of our electrical energy requirements from renewables by 2030.

Beyond this we need the technologies that can lead to the deep decarbonisation of steelmaking to mature. I think India is in a good place for this. The rapid growth of renewables has the potential to support the development of green hydrogen infrastructure, and we have empty gas fields near where we’re based in Hazira, which makes carbon capture a possibility.

In terms of our expansion plans though, the present economic reality is that new blast furnaces are the only viable way to meet India’s huge demand for new steel in the short-term. We are however designing this next phase of our steel capacity with state-of-the-art equipment that can be modified to incorporate low-carbon emissions energy sources such as biomass, hydrogen or CCS, when they become available and competitive.