India & Japan boost partnership in manufacturing sector

Economy


NEW DELHI: India and Japan has taken a key step towards widening their economic partnership in the steel sector and steel industry which will boost India’s manufacturing industry.

On December 22nd the “Memorandum of Cooperation between the Ministry of Steel, Government of India and the Ministry of Economy, Trade and Industry, Government of Japan in the Field of Steel Industry” was signed.

The respective signees were Pradip Kumar Tripathi, Secretary and TANAKA Shigehiro, Vice-Minister for International Affairs.

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The MOC aims at encouraging mutual cooperation in the steel industry by establishing the framework of India-Japan Steel Dialogue at a Joint Secretary level.

Through the Dialogue, both sides are expected to deepen mutual understanding on the situations surrounding the steel industry in both countries as well as in the international market (where excess supply of steel is an issue), to discuss trade and investment related issues, and thereby to promote sustainable growth in the sector.

India is currently the second largest producer of steel. Its demand is also growing as the economy expands. The steel consumption in India in 2017 (88.68 million tons) was 1.7 times larger than that in 2007 (World Steel Association). However, India’s per capita consumption of steel remains 75.3kg in 2017, only one seventh of those of Japan (549.9kg) or China (544.5kg), signifying a large margin for further growth.

Against this backdrop, the Ministry of Steel is planning to expand steel production capacity to 300 million tons by 2030-31. Such an expansion can be sustained through adequate domestic demand creation, which is a potential area of cooperation between India and Japan.

Considering that the imports of steel from Japan to India are largely consisted of high grade steel, improving quality of steel is also of interest to India. In the 2010s, Japanese companies are increasing their footprints in Indian steel market, collaborating with their partners to produce quality steels.

In 2019, Nippon Steel purchased, together with Arcelor Mittal, Essar Steel India Limited, which turned out to be one of the largest investment made by a Japanese company in India. Nippon Steel has also established a JV with TATA Steel, which produces high grade steel to be used for automobiles. JFE Steel is another front runner investor, working with JSW Steel through investment and technology transfer. A conglomerate of companies, led by Mitsubishi Corporation and Larsen & Toubro, is working with Steel Authority of India Limited (SAIL) for the modernization of Rourkela Steel Plant.

G-to-G cooperation is also expanding. Since 2018, METI started exchanges of experts to advance energy efficiency of steel mills and to expand steel utilization in buildings in India. In 2019, a series of seminars were conducted, with the grace of presence by Shri. Dharmendra Pradhan to the ones held in Bhubaneshwar and Delhi.

Steel laid, indeed, a foundation of the current strong bilateral bonds between India and Japan. After the Second World War, resource-scarce Japan could not have made a rapid reconstruction and economic recovery without the large volume of iron ore exported by India (starting from 1958). In 1960, 30% of iron ore imported to Japan came from India.

Steel, being an indispensable mid-product for India’s manufacturing sector, will continue to play a significant role in Make in India and Self-reliant India campaigns. Increasing the quality and quantity of steel manufactured in India, as well as providing a predictable and rules-based import regime are critical. The India-Japan Steel Dialogue under this MOC is expected to advance dialogues and cooperation on these matters.



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