Last few years were quite challenging for the metals industry. On one hand the demand did not rise up to the expectations and on the other hand, the cost of vital inputs was on the rise. Most of the developed world countries are going through an economic slow down and this suppressed the growth of the industry too. Many infrastructure projects were on hold due to liquidity crunch. As we all know, infrastructure and the construction together give the biggest trigger to the metals demand. Thus this situation results naturally in lower metal demand.
Indian story is slightly different. India too had its share of challenging days but fortunately the Indian economy showed up a comparatively good performance and this naturally helped various industry verticals including that of metals. Secondly, the Indian auto industry did fairly well in these testing years which helped foundry sector to survive. Actually, lot of foundries expanded their capacities in anticipation of good export opportunities to European countries but this thinking was proved wrong by the struggling economies of most of the countries in Eurozone. Today, most of the Indian foundries are aiming for domestic markets rather than exports.
Today, if an investor has to put his money, it is but natural that he will strongly consider Indian economy. Auto sector is progressing well, the speed of infrastructure development has also picked up to some extent, most of the raw material issues are sorted out and most importantly, majority of people believe that the Indian economy will continue to grow at a decent rate. Thus there is a strong reason to bait on India’s prospects. Further, introduction of GST will also have some added attraction about Indian economy. After initial teething problems, it is expected that the tax structure will be more simple, transparent and more industry friendly. In fact, from the last few months, the foreign direct investment (FDI) has already started scaling up in anticipation of GST regime.
I hope the positive sentiment in the industry continues and the metals industry in particular benefits from the economic progress and the infrastructure development.