Title: Revisit Measure of degree of competitiveness: A case study of Indian Steel.

Abstract:

Given India's tremendous growth in the sector over the past few years, the competitiveness of the
country's steel industry has been the focus of numerous studies. Using the use of secondary data
from the worldsteel.org database for the years 2002 through 2019, this research article seeks to
reevaluate the indicator of the level of competitiveness of the Indian steel sector. Descriptive
analysis is used in the study to look for trends and patterns in the data and to pinpoint important
variables affecting the competitiveness of the Indian steel sector. The study's findings offer
crucial information to various stakeholders, including legislators and business professionals.

Introduction:

The Indian steel industry is a crucial element in the country's economic development, as it serves
as a vital input for various manufacturing sectors. In recent years, the industry has experienced
significant growth, resulting in India becoming the second-largest steel producer worldwide.
Despite this growth, there is a need to assess the competitiveness of the Indian steel industry and
identify the factors that contribute to its success. Therefore, this research aims to revisit the
measure of the degree of competitiveness of the Indian steel industry by analyzing secondary
data obtained from the worldsteel.org database spanning the years 2002 to 2019.

Literature review:

S. No Area Reference Outcome

1. To what extent are EU (Okereke C, 2012) 1. The research paper examines the
steel companies competitive vulnerability of the EU steel
susceptible to sector to climate policy.
competitive loss due to 2. The paper concludes that the justifications
climate policy provided by the steel firms for preferential
treatment are only partially valid, and the
success of the strategy to gain preferential
treatment is due to information asymmetry
and the political economy of EU climate
regulation.
 3. The paper highlights the need for a more
evidence-based approach to allocating
carbon allowances to industries and the
importance of transparent and accurate
information in policymaking.

2. Opportunities and (Muslemani, 2021) 1. The paper explores the potential for a
challenges for market of "green steel" produced through
decarbonizing steel less carbon-intensive processes.
production by creating 2. The study identifies the need to establish a
markets for ‘green common understanding of what
steel’ products "greenness" means in the context of
steelmaking and explores potential policy
mechanisms to support the development
of green steel.
3. The paper suggests that the automotive
industry is a likely candidate for green
steel demand, which could be supported
by price premiums paid by willing
consumers, such as those of high-end
luxury and heavy-duty vehicles.

3. Industrial solid waste (Krishna R, 2020) 1. The paper highlights the increasing
management through generation of industrial solid waste
sustainable green worldwide and the need for sustainable
technology: Case study approaches toward integrated solid waste
insights from steel and management.
mining industry in 2. The study focuses on waste management
Keonjhar, India strategies adopted by the iron and steel
industries and mining for cleaner
production and sustainable development
through the effective utilization of solid
waste in the construction industry,
particularly in geopolymer concrete.
3. The paper presents short case studies to
discuss the response from the steel
industry and mines toward sustainable
development and waste management
following the usage of GGBFS for the
production of geopolymer concrete
4. Government Policy (Chaturvedi S, Identification of the government policies and
and FDI Triggering 2019) regulations that have positively impacted the
Growth Opportunities growth of the iron and steel industry in India.
of Iron and Steel in
India

5. Structural Changes and (Kumar S, 2021) 1. The research paper highlights the
Competitiveness of the importance of structural changes in the
Steel Industry in India: Indian steel industry, such as the
Assessed by consolidation of steel companies and the
Productivity Growth shift towards producing higher-value steel
post Economic products. These changes have contributed
Reforms to the industry's productivity growth and
improved competitiveness.
2. The study suggests that further policy
interventions are needed to sustain the
productivity growth of the Indian steel
industry.
3. The paper recommends policies that
support investment in research and
development, provide incentives for the
adoption of new technologies, and
promote international collaboration to
enhance competitiveness in the global
steel market.

6. Global (Mitra , 2010) Global competition for steel production has been
Competitiveness in the decreasing while India's market share is
Steel Industry increasing, presenting an opportunity for Indian
steel companies. India, along with China, has seen
the greatest growth in market share among the top
ten producing countries, and is in a favorable
position due to low labor costs, availability of raw
materials, and growth rate of investment.

7. IE Tools for Boosting (Akarte M, 1. The research paper reviews various

Competitiveness in Khanzode V, Iqbal industrial engineering (IE) tools and
Iron and Steel Industry: R, Tiwari M techniques that can be used to enhance the
A Review Kumar, 2021) competitiveness of the iron and steel
industry.
2. The paper identifies several key IE tools
 such as simulation, optimization, and lean
manufacturing that can help iron and steel
companies improve their operations and
reduce costs.
3. The study concludes that the effective
implementation of IE tools can help iron
and steel companies improve their
productivity, quality, and competitiveness,
leading to long-term success in the global
marketplace.

8. Evaluating Indian Steel (Pervej & Anjum, 1. The study uses the Revealed Comparative
Industry’s Trade 2017) Advantage (RCA) index to assess the
Competitiveness Based trade competitiveness of the Indian steel
on RCA Index industry.
2. The results indicate that India has a
comparative advantage in the export of
certain steel products, particularly those
that are less sophisticated and have lower
value-added content.
3. However, the study highlights that there is
a need for the Indian steel industry to
focus on upgrading its technology and
improving product quality in order to
compete with other major steel-producing
countries.

9. Export and Import (Muthuswamy, A, 1. Indian steel companies have invested

Performance of Steel in 2019) heavily in modernizing and expanding
India their existing units and environment-
friendly operational plants.
2. The Indian steel industry is fully geared
towards improving exports of steel to
other developed countries for the purpose
of gaining profits.
3. The industry aims to create a world-class,
cost-efficient, environmentally friendly,
and socially responsible sector.
 10. An integrated analysis (Xiaoyang Wang, 1. CO2 emissions of China's iron and steel
of China’s iron and 2022) industry are projected to peak at around
steel industry towards 1514.14-1530.86 million tonnes before
carbon neutrality 2023, and carbon sinks will be required to
absorb more than 72.78 million tonnes of
CO2 in 2060 for achieving carbon
neutrality.
2. Promotion of energy-saving technologies
is the most effective measure during 2020-
2060, contributing approximately 22.07%
of CO2 emission reduction.
3. Promoting EAF with 100% scrap instead
of EAF with 50% scrap would lead to
cumulative total cost savings of around
4361.04 billion CNY and consume 15.14
billion tonnes of scrap. It is also essential
to support domestic iron ore enterprises
through tax relief and accelerate the
construction of the scrap recycling
industry to achieve the goals of carbon
neutrality and raw material security.

Methodology:

I. Data Type: Table 1: Time series data & Table 2: Cross-sectional data

II. Data Source: Secondary Data Using www.worldsteel.org

Period of Study: From 2002 to 2019

We are focusing solely on data from a specific period because the steel industry has undergone

significant changes since 2020 due to the COVID-19 pandemic. Beginning in 2002, the steel

industry experienced exponential growth, particularly in China. Between 1992 and 2002, global

crude steel production grew at a compound annual growth rate of 2.3%. The Asia Pacific Region

is the largest steel-producing region in the world, accounting for 44.5% of global crude steel

production in 2002. China and Japan dominate crude steel production in the Asia Pacific,

contributing over 30% of the world's crude steel production since 2001. In the first nine months
of 2003, the International Iron & Steel Institute reported a 7.1% increase in world steel

production compared to the same period in the previous year, with China alone experiencing a

22.8% growth rate over the same period.

Tools Used For analysis:

The project consists of two parts: descriptive analysis and statistical analysis. The objective of
the statistical analysis is to identify the trend in the level of competition among countries
globally competing in the steel industry. The null hypothesis (Ho) is that there has been no
change in the global competition in the steel industry, while the alternative hypothesis (Ha) is
that there has been an increase or decrease in the same.

To determine the level of global competitiveness among nations, we will use a test procedure
that involves collecting the market shares of countries that compete in global steel production.
Based on Roy's method from 2006, we will use a formula to calculate the degree of competition,
which considers the market share of each nation, denoted as mi, with i ranging from 1 to k. By
applying this formula, we can generate a time series dataset with one measure calculated for each
year. This will enable us to analyze the trend in global competition over time.

Roy’s Model formula for degree of competition is mentioned below:

The test statistic used for the regression coefficient is the t-statistic, which is employed to test
hypotheses regarding an unknown population mean when the standard deviation value is
unknown. To carry out trend analysis, we will use the formula for the t-statistic.
BCG Matrix:

The BCG matrix, also known as the growth-share matrix, was utilized to assess the industry
situation based on its growth rate. This matrix comprises four strategic positions, namely cash
cows, dogs, stars, and question marks.

Analysis:

1. Desscriptive Analysis:
 As we can see, the production data of steel in various countries in 2019 indicates that,
except for China and India, all countries experienced negative growth rates. Between India
and China, China recorded a higher growth rate of 7.36% compared to India's 4.11%.
Consequently, China's market share in the steel industry amounted to 53.25%, while India's
market share stood at only 5.92%. This significant difference is attributed to China's
position as the largest producer of steel in the world and the added advantage enjoyed by
Chinese manufacturers
due to economies of
scale and government
subsidies. Therefore, we
can consider the relative
market share of China
as 1.

According to the BCG

matrix, we observed
that China occupies the
STAR quadrant, which
has the highest market
share and growth rate
among all. India, the
second-largest producer of steel, also falls under the STAR quadrant, but with a
comparatively lower market growth rate and share than China. The USA is in the process
of transitioning from the CASH COW to the STAR quadrant. Most other countries
examined in the study for 2019 are located in the CASH COW quadrant.

2. Statistical Analysis: We employed Roy's Model to conduct statistical analysis on World

Steel Production data from 2002 to 2019, and from this, we drew several conclusions. We
utilized the Global Competitiveness Index (GCI) parameter from Roy's Model to examine
India's performance over the given years. To accomplish this, we formulated null and
alternative hypotheses, where H0 states that GCI is independent of time across the
years, while H1 proposes that GCI is not independent but dependent on time over
the given years.

Roy’s Model:
 Regression Model:

Conclusion:

1. Positive RCA
2. Several factors that have contributed to growth.
3. Government support and investments in technology and infrastructure can help.

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