The forthcoming budget is an opportunity for a “call to action” for India’s refractory industry, which is critical to driving India’s growth story. Focusing on manufacturing and infrastructure has been a priority for the Government of India as a driver for economic growth. However, despite the precise impact of the refractory sector on industries such as steel and cement, enablers through a balanced policy environment for the refractory space have seemingly not kept pace with this growth ambition. The budget could, therefore, be an inflexion point for this industry if opportunities are leveraged to provide a much-needed boost for this sector. This can happen through budgetary allocation and by making the sector eligible for the PLI scheme.
Case for budget allocations and PLI
In India, the refractory industry is fragmented, with only a few established players. As quoted in media reports currently at 55.16 MT and projected to grow at a CAGR of 4.5% through 2024-29, a separate budgetary allocation could play a crucial role in augmenting capacity and taking this industry’s growth to new heights.
Given the above, it’s essential to understand and reiterate the criticality of the refractory industry in the context of India’s growth ambitions. India today is one of the world’s top five economies and is, by all accounts, poised to enter the top three by the turn of the decade. The Government believes that the route to a developed power status or ‘Viksit Bharat’ by 2047 lies through a strong manufacturing backbone and a robust infrastructure. That will demand a huge capacity and production boost for steel and cement in the country.
Not surprisingly, steel production is pegged at 230 MT by 2030, a 53 % increase from current levels, while cement production is set to double to around 12 % CAGR by the same time frame. Another trigger point for growth would be the increased demand for aluminium across sectors, whether in EVs, construction or, for that matter, power generation.
However, despite these tailwinds, headwinds persist. The industry is overly dependent on imports for its raw materials as there are geological and technological constraints on sourcing them from India. Besides, the refractory industry is navigating high commodity prices and inflation, as well as high shipping and logistical costs globally, because of the geopolitical environment.
This is something to take cognizance of, and hence, there is a growing requirement to expand eligibility for India’s marquee PLI scheme to the refractory industry. Currently, Rs 270 cr has been budgeted for specialty steel on the revenue account for the FY 2024-25, but there need to be budgetary allocations for refractories per se. This will enhance domestic sourcing and manufacturing, boost competitiveness and provide an uptick in employment. More importantly, it is expected to reduce import dependence in the sector to an extent.
Criticality of the sector Â
For the uninitiated, the industry’s criticality stems from its back-end linkage in the production process of downstream industries such as steel and cement. Refractories serve as the backbone of industrial operations by providing essential materials for high-temperature processes across various sectors like steel, cement, glass, non-ferrous metals, and petrochemicals. They are essential at every stage of steel production, cement manufacturing, and glassmaking, ensuring the efficiency and quality of the final products.
Investments in research and innovation are imperative to ensure that the refractory industry is leading the way in delivering cutting-edge solutions to customers. Companies in the refractory space have already made leaps in this regard by providing technological solutions to their customers that help them in their decarbonization journey.
In the future, growth in the refractory industry must be sustainable. Major refractory players are actively reducing their carbon footprint through innovative solutions and committing to the circular economy approach to address sustainability by investing in recycling technology. India is entering into the next phase of economic growth, and a balanced policy environment is the need of the hour for the refractory industry as it will continue to power the nation’s growth
