Riding on the back of growing government spending on infrastructure projects as well as surging demand from the housing and automotive sectors, Indian steel industry has overcome the bottom. However, the industry still has a few significant challenges to overcome.

Indian steel industry which has been facing tough times following the global recession has started showing some distinct signs of improvement in recent months. Strong domestic demand and increased infrastructure spending by the government have been driving the industry at a time when the scars of recession have not disappeared completely yet. Since March, the industry is running at full capacity, and domestic steel majors such as Tata Steel and state-run SAIL have reported double-digit growth in production and sales during the second quarter of the current financial year, reflecting clear signals of a recovery in the steel sector of the country.

Now, analysts anticipate the demand for steel in India to surge by 8 to 10% in this fiscal in view of the series of government supported infrastructure projects under the stimulus package and the work ahead of Commonwealth Games which is scheduled to be held in 2010. Furthermore, it is expected that global steel demand would return to around 5% growth rate, post-crisis, led by emerging markets, including India. All these augur well for the steel firms operating in India. However, industry experts feel that the rising domestic demand for steel would raise imports especially at a time when the domestic steel prices are higher as compared to international prices.

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