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1. Paper WHITE PAPER
Indian Metal Industry

2. Contents
EXECUTIVE SUMMARY ............................................................................................... 3
1. INTRODUCTION .......................................................................................................... 4
2. INDIAN METAL INDUSTRY .......................................................................................... 5
3. DOING BUSINESS IN INDIA – 10 IMPORTANT CULTURAL DIFFERENCES ...................... 8
4. REFERENCES ............................................................................................................... 9

3. Executive Summary
The metal industry in India has witnessed an immense growth in the last 4 to 5 years. With the fast
growing Indian economy, the metal industry is also expected to touch newer horizons. This
document provides a comprehensive overview on Indian economy, with a snapshot on two of the
important Indian states that hold the key for the growth of Indian metal industry. The document
highlights the status of the metal industry, and distinguishes the prominent players in the field.
There is an increasing demand from various metal consuming sectors like automobile, consumer
durables, construction etc. The future prospects for the industry look very promising, with various
government initiatives being taken to encourage foreign investments.
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4. 1 Introduction
Snapshot
Area 3.29 million Sq.km.
Capital New Delhi
Population 1.17 billion (estimation as per 2011
census)
Languages Hindi (official language of the
Union), English (business language)
Major cities New Delhi, Mumbai, Kolkata,
Chennai, Bangalore, Hyderabad,
Pune, Lucknow, Kanpur
Urbanization 28%
• Gujarat
• Maharashtra
Time zone 5 hours 30 minutes ahead of GMT
India - The Favored Investment Destination
GDP Growth Strong Economy
10 9 8.6 Manufactu Agricultur
ring Sector e
8 7.4 7.4 16%
29%
6
4 Services
Sector
2 55%
0
2008 2009 2010 2011
FDI- Top Sectors Top FDI Destinations in the World
Rank Countries
Services
Sector
21
1 China
Other 21%
44% Hardware
and Software
8%
2 United States
Real Telecommun
estate
14%
ications 3 India
8%
Automobile
5% 4 Brazil
India secured top rank in availability of
US $ 17billion FDI inflow between April
skilled manpower, access to local and
international market, and strong market 2010 and January 2011
fundamentals
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5. 2 Indian Metal Industry
Market Overview
The metal industry is a key sector that has been instrumental in the fast growth of Indian economy.
It meets the requirements of a wide range of important industries like engineering, electrical and
electronics, infrastructure, automobile and automobile components, packaging etc. The industry is
highly fragmented, with a large number of players actively participating in both organised and
unorganised segments.
India is the largest producer of sheet mica, the third largest producer of iron ore, and the fifth
largest producer of bauxite in the world. Crude steel production in India has expanded at a CAGR
(Compounded Annual Growth Rate) of 7% over an extended period between 1980-2010.
Current Status
Iron and steel is the largest segment of the Indian metals and mining industry, amounting to 73.8%
of the overall industry value. The coal segment amounts to 20.8% of the overall metals and mining
industry of the nation.
Segments of metal Industry (2010)
2% 0.2%
3%
21% Iron & Steel
Coal
Aluminium
Base Metals
74%
Precious Metals and minerals
Rising Steel Demand
• India is the 5th largest producer of crude steel in the world.
• Steel production has grown at a CAGR of 8% between 2005 and 2010.
• India is the world’s 3rd largest exporter of iron ore.
• Steel industry is the biggest consumer of iron ore. Iron ore imports grew at a CAGR of
16.2% from 2006 to 2010.
• India has tranformed itself into one of the biggest importer of steel due to strong growth in
the manufacturing sector, and with the implimentaion of various private and government
funded infrastructure projects.
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6. Steel Imports and Exports (in '000 tonnes)
8000 7,382
7000 6,581
5,839
6000 5,415
5,000 5,183
5000 4,436
4000
3,251
3000
2000
1000
0
2007 2008 2009 2010
Imports Exports
Demand from different Sectors
Automotive Sector
• Automotives production has increased at a CAGR of 13.3% from 2005 to 2011.
• Sustained growth in India’s automotive sector has been driving the demands for both steel
and aluminium.
• India is expected to become the world’s 7th largest automobile market by 2016, and the 3rd
largest by 2030.
Power Sector
• The power sector is responsible for a large share of aluminium and coal consumption in the
country.
• Power supply in India has increased at a CAGR of 5.6% during the phase between 2006 to
2011.
Construction Sector
• Key infrastructure projects continue to provide lucrative business opportunities for steel, zinc
and aluminium producers.
• Infrastructure industry has grown at a CAGR of 14.3% from 2008 to 2010.
• Iron and steel being the core components of the real estate sector, and with the ever-rising
demands for residential and commercial construction projects, there will be an increasing
demand for these metals.
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7. Advantage India
Demand Growth
Untapped metal reserves in India are to the tune of 82 billion tonnes. The value of metals and
mining industry is estimated to be around US $ 197 billion by the year 2014.
Strategic Location
India holds a fair advantage in the production and conversion costs of steel and alumina. India’s
strategic location allows for the convenience in exports to both developed and developing Asian
markets.
Presence of supporting industries
The metal industry in India is well supported by India’s mining industry. Additionally, the
educational and research institutions for advanced studies in metallurgy and material sciences have
paved the way for the strong growth of metal industry in India.
Government support
• Import duty on stainless steel & alloy steel, and customs duty on primary and secondary
metals, have been reduced from 15 to 10%.
• India has entered into a Free Trade Agreement (FTA) with Sri Lanka, which has resulted in a
large influx of copper and copper products at zero import duty from Sri Lanka.
Foreign Direct Investments (FDI)
• In India, 100% FDI has been approved fo metallurgical industries since 1991.
• During the period between April 2000 and April 2011, the industry has received FDI worth US $
4,286 million.
• FDI inflow for the period of 2010-2011 was a whopping US $ 1,105 million.
Future Outlook and Opportunities
• Government’s initiatives on power and infrastructure development, reduction in import
duties, and facilitation of FDI, along with overall economic growth, will provide futher boost to
the Indian metal industry.
• Rural per capita steel consumption is more likely to get doubled to 4 kgs by 2015.
• Sectors such automobiles, consumer durables, and infrastructure projects will also help in the
robust growth of the steel industry.
• Constructions in urban areas as well as increased usage of steel in rural areas will lead to the
increase in demands for steel.
• The increasing importance shown by the government to go in for Public Private Partnership
(PPP) in several sectors, and the Viability Gap Funding close to completion stages, will also
help the growth of steel sector.
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8. 3 Doing Business in India - 10 Important Cultural Differences
1. A received present or gift should remain unwrapped until the guests have departed. The
unwrapping of a gift immediately upon receiving is seen as an act of greediness, or is
considered as impolite.
2. Unlike the Dutch, Indians tend to ask questions about the private life during an initial meeting.
This is the way of getting to know the other person better on a personal level. Getting straight
into business talks might make them feel a bit awkward or uncomfortable. Charm, sense of
humour, flattery and especially giving compliments can help a lot in forming good business
relationships.
3. “Yes” can mean many things in India. Indians do not nod their heads when they agree, but will
move their chin from left to right making their heads move the same directions. This gesture
however can have several implications or meanings.
4. Punctuality has a different meaning in India, and because of this, the scheduled meetings can
easily get delayed.
5. Be prepared to discuss even about minor things in business. Indians love to discuss
everything. It is advisable to agree on some aspects from time to time to improve the business
relationship.
6. Doing business in India without any guidance can prove to be a difficult task. Taking assistance
from a local agent or representative, who is familiar with the juridical and financial system of
India, is highly recommendable. Indian bureaucracy is not something that you would want to
tackle on your own. Besides, local help can be the right connection for you to reach out to the
suitable contacts that you are looking for.
7. In India patience is a valuable skill in doing business. Finding the right partner and negotiating
a deal will take comparatively more time than what you are used to in The Netherlands
(Europe). More time needs to be invested in creating a reliable relationship between the
companies.
8. An Indian will not easily show that he has not understood certain things. Also, declining
requests is not a common practice in India, and you will rarely hear an Indian say NO. Clear
structured communication is of a great essence to avoid differences in expectations by the
concerned parties.
9. The physical space between people in India is much more intimate. It is not uncommon to see
two Indian men walking hand in hand in public spaces. During the business meetings, it can so
happen that the Indian representative might shake your hand longer than what you are used
to.
10. It is not uncommon in India for clerks to receive an additional payment to speed up certain
administrative progresses. Corruption is integrated in many layers of the society in India.
However, the problem of corruption is being identified and addressed better these days, and
adequate measures are being taken to control this problem.
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9. 4 References
• IBEF, Metals and Mining , 2011,
http://www.ibef.org/download/Metals_and_Mining50112.pdf
• Ministry of Steel, Annual Report 2011, http://steel.nic.in/Annual%20Report%20(2010-
11)/English/Annual%20Report%20(2010-11).pdf
• Cygnus, Indian Steel Industry, 2011, http://www.scribd.com/doc/65179391/Indian-Steel-
Industry
• Department of Industrial Policy & Promotion, 2011,
http://dipp.nic.in/fdi_statistics/india_fdi_index.htm
NexusNovus – Enabling Business in India
No.7/1, 5th "C" Cross, Hutchins Rd, Cooke Town
Bangalore 560084, India
Tel. +91 80 4094 8438
info@nexusnovus.com
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