Steel Industry Rally to be Driven by Robust Auto Sector Demand

The sector, which manufactures around 26 million vehicles, is geared up for boosted production, following relaxations in pandemic-related restrictions.

SEATTLE (Scrap Monster): The resurging automotive industry in the country is expected to propel India’s steel sector growth.

The auto industry in the country is currently valued at around $118 billion. By 2026, it is projected to be the world’s third largest automotive market by volume. The sector, which manufactures around 26 million vehicles, is geared up for boosted production, following relaxations in pandemic-related restrictions.

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The government’s new voluntary vehicle scrappage policy is expected to boost demand for new vehicles. In addition, the government has announced production-linked incentives to the auto industry worth nearly $7.5 billion over the next five years. The budget has also proposed significant aid to automobiles and auto components sector. The above actions will foster the industry growth, which in turn will propel the growth of associated sectors including steel.

The revival of the industry will result in increased demand for quality raw materials for vehicle manufacturing. Incidentally, steel is one of the major raw material content in the manufacture of cars. As per estimates, a single car uses around 700 kilograms of steel. To meet the increased demand, the steel companies will have to boost their production capabilities.

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