In 2017, Indian economy was shadowed by demonetization in the first half and the implementation of much awaited GST.As mentioned in my last piece, one may debate on the long term utility of these measures but on a short term basis the economy did get a big jolt. Organised part of metals industry did not get much affected by demonetization and infact it gained a little bit from GST implementation. Now in 2018, Indian economy seems to have recovered from these tremors and is cruising forward. The GDP growth rates of the first two quarters of 2018 (7.5 % and 8.2 % respectively) are quite encouraging for the economy as well as for the metals industry. A good GDP growth rate always encourages the industry and in turn helps the metal demand to rise.
If one looks at the user industry sectors of metals, there too a positive sentiment is prevailing. Auto industry is growing at a decent speed and creating a good demand for metals and auto parts. This is a great news for foundry sector and as we look around, most of the foundries are doing exceedingly well breaking their previous production and sales records. Many of them are in expansion mode and one can visualize a far more robust and growing foundry sector in coming years. Experts do feel concerned about the auto parts demand on a long term basis when electric vehicles will be popular. In any case, today all seems to be well.
As regards construction, one may develop a feeling that it is stagnated in big metros. Yes, it may be the case but look at tier II and Tier III cities. They are growing at amazing speed and eating lot of metal in the process. Today, one of the major concerns of the industry is rising oil prices. It makes the transport more costlier and affects all the products, industrial as well as household. As we all know, for producing a tone of metal, three tones of raw materials are required. Thus in totality, four tones are transported. With these facts in mind, one can imagine the impact oil price rise is going to have on metals industry.
If the industry has to progress, technology should provide the push and the direction for this transition. For the last few years, we have been talking about automation, robotics in metals sector. Now the concept of ‘Smart Manufacturing’ or ‘Industry 4.0’ is getting popular. With implementation of this, one can not only monitor but also effectively and efficiently manage his factory by using an app on his mobile phone. I feel now is the time Indian metals industry should look for technological and digital upgradation so as to improve on quality, productivity and overall efficiency of the plant.