Global steel industry monitors Indian elections

The swearing-in of Narendra Modi as the 15th Prime Minister of India on May 26, 2014 once again sparked a sense of enthusiasm and strength in the country, despite the promise of "getting sick" - good days - in the future.

Five years later, with the world's largest elections in the country, sentiments about the current political situation are getting more complicated, but there is no doubt that the world will closely monitor the outcome of the vote.

Government policy has sparked fierce debate in the country, with critics questioning the calculation of GDP, the negative impact of demonetization on trade, and the clumsy approach to selling goods and services. service tax, agrarian problems, and the reliability of employment data.

However, government initiatives to build world-class infrastructure, introduce debt settlement through bankruptcy law, loosen business rules, and eliminate corruption in government transactions - among others - are also hard to deny. It is for this reason that the Indian steel industry, whose prospects depend on a boost to infrastructure and construction in the country, is looking forward to a second term as Prime Minister Modi.

India will consume more and more steel, and this expected growth has sparked tremendous interest from global steel companies and hedge funds in fierce trading for debt-ridden domestic steel companies. In 2018, India replaced Japan as the second largest steel producing country in the world, and the Indian Steel Producers Association predicts that steel demand will grow by 7.1% in 2019.

Companies such as ArcelorMittal and Nippon Steel & Sumitomo Metals have been waiting for years to quickly penetrate this profitable high consumption area. Through the joint venture, the companies were finally able to make a dent by acquiring Essar Steel as part of a debt settlement process.

But it was clear that doing business in India - especially setting up a new steel mill - would not be a walk in the park. The history of POSCO is an example of this.

In 2005, POSCO India signed a memorandum of understanding with the government of Odisha, a state in eastern India with large reserves of high-quality iron ore, to build a 12 million tonnes per annum integrated steel plant with a proposal for $ 12 billion. At the time, it was billed as the largest foreign direct investment in the country, but was known to have been marred by local resistance.

The land intended for the company was eventually seized in 2017 after it had not been used for several years. In its defense, POSCO argued that the plant could not be established without a grant for iron ore mining, allowing only the company to mine iron ore.