In pursuit of transforming India into a global manufacturing hub, the Modi government has attracted significant foreign investment, leading to a surge in inflows. Societe Generale, a financial services group based in Europe, has recently acquired a stake in Rama Steel Tubes, a prominent manufacturer of steel pipes.
According to data from the BSE, Rama Steel has entered into an agreement with JSW Steel, one of India’s largest steel manufacturers, to procure hot rolled coils, a crucial component in the production of steel tubes and pipes.
This development holds great significance as the demand for steel and related products in India has consistently expanded, defying the sluggish global demand. The Indian Steel Association (ISA) forecasts that steel demand in India will continue to grow by 8-9 million tonnes. In the upcoming year of 2023-24, the projected steel demand is expected to reach 128.9 million tonnes, up from the previous year’s 119.9 million tonnes. This growth is primarily driven by increased demand in the domestic construction, railways, and capital goods sectors.
Moreover, the memorandum of understanding (MoU) between Rama Steel and JSW Steel designates Rama Steel as the official distributor partner for hot rolled coils in the entire western region. The MoU offers several competitive advantages by providing access to high-quality raw materials and optimizing the procurement process, thus enhancing the efficiency and effectiveness of the supply chain management capabilities, as stated in a statement filed with the SE.
The steel sector in India has thrived due to the country’s robust economic growth, with industries such as automotive and consumer durables expected to further drive steel consumption. India currently ranks as the world’s second-largest producer of crude steel, with a total output of 125.3 million tonnes in 2022-23, representing a 4.2% increase from the previous year.
It is worth noting that the government has taken proactive measures to increase the manufacturing sector’s contribution to the GDP, aiming to raise its share from the current 16% to 25%.