MAKE IN INDIA &

INDIAN STEEL INDUSTRY Jayant Acharya

Director(Commercial & Marketing)

JSW STEEL ,INDIA

18-11-2016

GLOBAL ECONOMY & INDIA

0.5

Global Economic growth continues to be fragile,India remains a “Global Bright Spot”

0.5

7.6

6.9

0.0

2.6 2.0

-3.7

2

WEO:GDP:Oct’16

X-Axis : GDP-PPP Per Capita ($) … Y-Axis : Per-Capita Steel Demand. (Kgs.)

Emerging Market Economies driving Global Steel Demand

Advanced Market Economies Emerging Market Economies

Bubble-Size : Steel Demand-2015 (MnT)

World

Japan

USA

Australia France

Korea

Taiwan

Canada

Germany Italy

China

Mexico

Brazil

India

Indonesia

Africa

1,499-MnT 73% 181-Kgs 27% 316-Kgs

Thailand

Turkey

Russia

GLOBAL STEEL

3

INDIAN ECONOMIC TRANSFORMATION

2015-16 2025-26

17% 25%

Country’s Growth to be fostered by Manufacturing

Manufacturing

4 Ref : Central Statistical Org , National Manufacturing Policy,India

30% 36%

46% 54% 53% 55%

18%

25%

28%

28% 31% 35% 52%

39%

27% 19% 15%

10%

1950s 1970s 1990s 2000s 2015-16* 2025-26*

Services Industry Agri

MAKE IN INDIA : OBJECTIVE

Make in India Global Recognition to

Indian Economy

Investment in

Manufacturing

World Class

Infrastructure

Employment

Facilitate FDI &

Investment Protect Intellectual

Property

Competitive

Industrial Environment Skill Development

5 Ref : Make In India Program,India

GDP Contributes

8%

Projected to

increase to

15% … by 2020

Employment

share

25%

With present work-

force of 110-Mn

Manufacturing

Contributes

45%

To country’s

industrial production

Export

Contributes

40%

To country’s total

exports

A Strong foundation of MSME vital for success of Make-In-India

THE MSME STORY

0%10%20%30%40%50%60%70%80%90%

100%

Tai

wan

Ital

y

Fra

nce

So

uth

Afr

ica

Ger

man

y

Sin

gap

ore

UK

US

Russ

ia

Can

ada

Arg

enti

na

Bra

zil

Ind

ia

MSME contribution to Employment

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Tai

wan

Ital

y

Fra

nce

So

uth

Afr

ica

Ger

man

y

Sin

gap

ore

UK

US

Russ

ia

Can

ada

Arg

enti

na

Bra

zil

Ind

ia

MSME contribution to GDP

6 Ref: KPMG

Steel is vital for the success of manufacturing led economic growth with thrust

on Infrastructure and construction

Developed countries with their prominent industries witnessed economic

development and growth at the back of a robust and sustainable domestic steel

industry

Direct and In-Direct usage of steel across sectors and industries

To build India, ‘Steel - Made-In-India’ is need of the hour

SIGNIFICANCE OF STEEL : MAKE IN INDIA

7

Indian steel industry has large potential for robust and sustainable growth

INDIAN STEEL INDUSTRY

DOMESTIC

DEMAND

LAND

MANPOWER TECHNOLOGY

RESOURCES

Year

MT

8 Ref : Joint Plant Committee-report, World Steel Association

OPPORTUNITIES

9

• Demographic Advantage

• Rurbanization

• Infrastructure & Manufacturing

DOMESTIC DEMAND

• Technological Alliance

• State of the Art Facilities

• Value Added Products

TECHNOLOGY

• Amongst the lowest cost producers

• Entrepreneurship

COMPETITVENESS

DEMAND DRIVERS

AUTOMOBILE

• Contributes 7.1% to GDP and expected to ~12% by 2026

• Expected to be Worlds 3RD largest auto market by 2026

• >6 million hybrid vehicles by 2026

• Commercial Vehicle to grow to 2 Mill by 2026

• Two wheelers 50.6 million units by 2026

AUTO COMPONENTS

• GDP contribution to increase from 2.35% to ~7% by 2026

• CAGR of 14%, 2006 – 2016

• Turnover to increase 5x to $200 Billion by 2026

• Exports to grow 7x to $80 Billion ,2026

• Investments of $40 Billion by 2026

CONSTRUCTION

• Contributes >8% to GDP

• 100 Smart Cities and 500 AMRUT Cities to invite investment of $30 Billion in the next five years

• $9.25 Billion. would be invested under Swachh Bharat Mission (SBM) in urban areas

• USD 650 Billion will be required for urban infrastructure over the next 20 years

RAILWAYS

• Contributes 2% to GDP

• Investment of $131 billion in the next 5 years

• Dedicated Freight Corridor are under construction PAN India

• Eastern Freight Corridor – 1840 KM

• Western Freight Corridor

1540 KM

10 Investment potential of $4.7 Trillion through Make in India

Ref : Make In India Program,India

DEMAND DRIVERS (Contd)

DEFENCE

• Budget allocation ~$35 Billion in 2016-17

• 60% Defence requirement is met through imports

• 100% FDI under various options

• Contractual offset obligations worth $4.5 billion due in next 6 years

ROADS & HIGHWAYS

• Contributes 6% to GDP

• Announced Projects include Bharatmala, Sagarmala and other NHAI projects covering Length : ~44000 (Km) @ Estimated Cost: ~$97.20 billion

• Highway traffic to reach around 13,000 billion tonne km (btkm) by 2030

RENEWABLE

• Renewable energy contributes 14.7% of the total installed capacity

• 175 GW of renewable power by 2022

• 100GW of Solar, 60 GW of Windpower and 15 GW of Biomass and small Hydro

• India's Annual Solar installations to grow over 4x by 2017

OIL & GAS

• Refining capacity to increase from 231 MT to 257 MT in next 5 years

• Completion of gas grid construction of 15,000 km of gas pipeline underway

• 326 cities to be connected under city gas distribution network (CGD) by 2022

• RLNG capacity to be increased from 22MT to 48 MT

11 Investment potential for Infrastructure estimated at $1.07 Trillion

CHALLENGES

12

• Finance Cost

• Cost of Infrastructure and Logistics STRUCTURAL

DEFICIENCY

• Availability of high grade Iron Ore, Coking Coal, Fluxes

RAW

MATERIAL

• Land and Labour Laws

• Ease of Doing Business

REFORMS

• Threat from imports at Predatory Pricing IMPORTS

Thank You