Editorial – July 2023
‘Customer is the most important guest to your premises’. You must have read this line displayed on the walls of many shops in the neighbourhood. It is a famous saying by Mahatma Gandhi and is strikingly true. Similarly in steel industry, (actually for any industry) demand is the most important factor affecting the growith prospects of the industry. If demand is robust, everything else can be arranged or managed.
Today the economies of the whole world are fighting for survival. The US is fearing to enter the recession and most of the economies in the Eurozone are struggling. As such the economic performance of Eurozone is stagnated for the last so many years and now it is further damaged by the ongoing Ukraine – Russia war. If the economies of the developed world are in such a dire state, one can only imagine the plight of developing and under developed countries/ regions.
Let us look at Indian economy on the backdrop of the above. Due to huge population, we have a sizable domestic demand which helps the economy wheel to rotate. Also, India’s international trade was negligible (though it is steadily rising now) and thus India is naturally shielded from the economic tremors emerging from the rest of the world. Thus in my opinion, India entering into recession is a very very remote possibility. In India, every year before the Union budget, there are series of meetings with the representative bodies of many inustries including our industry and the list of demands is usually very long. While I don’t doubt the genuity of this list, I vividly remember the words of a formar MD of a big steel business house. He used to say “Don’t give us anything. Just invest in the economy and importantly infrastructure. It will generate good steel demand and will take our industry forward.” This again brings us back to the subject of “demand” and underlines its importance. The present day Indian government is giving a lot of importance to the infrastructure development. Many projects of roads, tunnels, metros, airports, seaports, railway modernisation etc. are going on and already steel demand curve is feeling the heat. As such the Indian steel industry has completely come of of the shadow of covid and is roaring for a big forward leap. Atleast I got this impression from the recently held AIIFA annual event at the newly modernised Pragati Maidan.
As mentioned earlier, the demand is the most important factor but not the only factor deciding the growth prospects. As one goes forward, along with the new opportunities, new challenges emerge as well. Today, apart from technology up- gradation and digitalization, the world is also talking about reducing the carbon footprint, using hydrogen instead of carbon as the reducing agent, green steelmaking etc. As regards logistics, the covid has completely changed the perception about it and today a completely different philosophy and strategy is being employed for logistics.
As they say, ‘Demand is most important but for a sustained growth, other factors too are important!’