Jap firms enhancing presence in auto-grade steel making

After making inroads into the fast-growing Indian automotive sector, Japanese firms are fast enhancing their presence in the manufacturing of auto-grade steel here to cater to the need of their peers.

The recent tie-ups like Tata Steel-Nippon Steel, JSW-JFE, Essar-Kobe are, however, not just meant for the Japanese auto firms having presence in India like Honda, Suzuki, Nissan and Mitshubishi, but also to cater to the other local auto makers.The country's largest steel maker SAIL is also in talks with Nippon and Kobe for joint venture partnerships.

The marriage is thus a win-win situation not only for the Japanese car and steel makers, but also for the Indian steel industry since they get hold of superior technology.

A slackening demand in Japan also make it imperative the Japanese firms to look into India, which is likely to become the third largest steel consuming country is the world soon. The Indian car market grew by 25 per cent in FY'10 over the previous fiscal.
     
"Japanese companies are interested in the Indian market since it's a big market and growing. Japanese auto makers are not very much comfortable with the quality of Indian steel and hence imports a large part of their requirement, which is very expensive," a steel industry official told PTI.
    
Besides, given the perennial problem of putting up new plants in India, the only realistic option for the Japanese steel makers left is to forge joint ventures with their Indian counterparts.
    
Indian roads are increasingly being occupied by Japanese auto makers. The four of them have already acquired over 55 per cent of the car market here.
    
The cut-throat competition in the Indian auto market will only make it mandatory for the Japanese auto makers to go for as much as possible on localisation, be it for component or steel.
    
"The auto industry is expected to be a major driver for steel demand in the country in the years to come. The MoU with Kobe Steel will further strengthen our product portfolio to enable to produce steel for high-end applications in the auto segment," Essar Steel Business Group Chief Executive Officer Malay Mukherjee said after inking the tie-up.