Metal Sector

Overview

India's metal industry makes a significant economic contribution to the nation. It generates around 4 million jobs and makes up roughly 2% of India's GDP. Steel dominates the industry, making up over 70% of all metal produced in India. Aside from iron, India also produces considerable amounts of aluminium, copper, zinc, and lead.

India's metal industry is well-positioned for expansion over the next few years. The nation contains sizable iron ore, bauxite, and other metal deposits. The government has also adopted a variety of initiatives to encourage growth in the industry and is supportive of it.

Rising urbanisation, industrialisation, and infrastructure development will all increase India's demand for metals in the upcoming years.

Value-added product production is receiving more attention: Indian metal industries are emphasising producing goods with added value, such as stainless steel and alloys. This is consistent with the government's strategy of fostering Indian industry.

Investment in new capacity: India's metal industry has made a large investment in new capacity. The rising demand for metals and the government's emphasis on fostering industry are what is driving this.

Metal exports from India's metal industry are significant. India exported metals worth $17.62 billion in 2022–2023 alone.

Key Facts

• The second-largest steel production in the world is India.
• The second-largest producer of aluminium worldwide is India.
• India is the world's fifth-largest producer of copper.
• India is the world's sixth-largest producer of zinc.
• The seventh-largest lead producer in the world is India.
• About 2% of India's GDP is accounted for by the metal industry.
• More than 4 million people work in the metal industry.
• Metal exports from the sector total more than $17 billion per year.
• Over the coming several years, the metals industry is anticipated to expand at a CAGR of 7-8%.

Opportunities

Rising urbanisation, industrialisation, and infrastructure development will all increase India's demand for metals in the upcoming years.

Value-added product production is receiving more attention: Indian metal industries are emphasising producing goods with added value, such stainless steel and alloys. This is consistent with the government's strategy of fostering Indian industry.

Investment in new capacity: India's metal industry has made a large investment in new capacity. The rising demand for metals and the government's emphasis on fostering industry are what is driving this.

Metal exports from India's metal industry are significant. India exported metals worth $17.62 billion in 2022–2023 alone.

Government backing: The Indian government is in favour of the metal sector. The government has implemented a number of policies to boost the sector, such as the National Steel Policy 2017 and the National Aluminum Policy 2016.

Challenges

High cost of raw materials: In India, raw resources like coal and iron ore are expensive. This poses a significant obstacle for the metal industry.

Chinese opposition: A significant producer of metals, China frequently exports metals for less money than India. Indian metal businesses find it challenging to compete as a result.

Ineffective manufacturing techniques: Some metal industries in India employ ineffective production techniques. Higher costs and lower-quality goods are the result of this.

Infrastructure deficiency: The Indian metal industry lacks sufficient infrastructure, including ports, highways, and power plants. As a result, the industry struggles to realise its full potential.

Environmental issues: The metal industry is a significant polluter. The federal government is acting to address these concerns, but there is still a long way to go.

Analysis

Revenue Growth: Over the specified time, the revenue for India's metal industry fluctuates. The income increased by 1.42% to Rs. 1,29,006.62 crore in 2020–21. Revenue did, however, see a tiny fall in 2021–22, with a growth rate of –0.86%. The income grew by 1.47% to Rs. 1,32,332.10 crore in 2022–23 (April–January). These variations show that the sector went through both expansion and decline over this time.

Operating Profit: The metal industry's operating profit exhibits notable differences as well. Operating profit during 2020–21 was Rs. 27,701.97 billion. The profitability then greatly improved, rising significantly to Rs. 51,129.85 crore in 2021–22. However, the operational profit dropped to Rs. 25,592.84 in 2022–23 (Apr–Jan). crore. This decline in operating profit suggests a decrease in profitability compared to the previous year.

Long-Term Liew:

Long-term growth in India's metal industry is anticipated, supported by rising global and Indian demand for metals. Additionally, it is anticipated that the sector would profit from government initiatives to promote the metal industry. The industry will need to overcome various obstacles, such as the high cost of raw materials and competition from China. Overall, India's metal industry is well-positioned for long-term growth.

Overall, India's metal industry is well-positioned for long-term growth. The industry is anticipated to gain from the rising metals demand, government assistance, and investment in additional capacity.

ROSHAN PATEL

Disclaimer:

The following Report is intended for informational purposes only and should not be construed as financial advice or investment recommendations. It is important to conduct thorough research and consult with a qualified financial advisor or professional before making any investment decisions.