For quite some time now, consumer industries in our country have looked to exploit the potential at the bottom of the pyramid, realising that while the earnings per unit may not be so rewarding in the rural areas, the volumes could be substantial.
The fact that around 72% of our 1.21 billion population resides in villages has prompted steel producers to set up rural networks and enhance steel availability through dealers, distributors, hypermarts and shops.
Over 12,000 such networks, set up and nurtured by primary steel producers in the past five years, have minimised difficulties in getting steel in areas that were earlier starved of this critical input. The difference between a consumer good and an industrial product, such as steel, lies in its use and application in a host of other commodities that need to be further processed and fabricated. And if these facilities are not made available within a jurisdiction of, say, 10 km of the villages, simply regular supply of rounds, TMT bars, angles, channels, plates, sheets and galvanised sheets would hardly enhance consumption.
As steel producers in India have never imagined themselves beyond suppliers of steel — thus leaving every associated activity to someone else ? the market development effort has been an isolated phenomenon and devoid of innovative thinking. A holistic approach could have taken Indian steel much ahead of its neighbouring countries. Good quality steel fabrication facilities in the country are pathetically limited. We can find hundreds of tiny and small units with steel fabrication facilities hardly follow any standards and practice with archaic tools, equipment and practices. Fabrication of doors, windows, grills, furniture, utensils, cots, chairs and tables, storage bins, tractors, hand trolleys, furniture, etc., for the village household has excellent potential and if these can be developed in more numbers, rural steel consumption can be augmented at geometrical progression.
The steel fabrication technique can take the form of a broader skill development process, under which a class of rural entrepreneurs can be created. They would be trained as project leaders to become eligible for loans from rural banks to set up steel fabrication facility in small tracts of land. Tying up with nearest rural dealer would ensure regular availability of steel. Easy fabrication facility in the neighbourhood would encourage rural residents to use steel-based products in a much larger way than what is being done currently. Steel producers can play a crucial role in promoting skill development in steel fabrication and contribute to employment and income generation in rural areas.
A recent survey estimated per capita rural steel consumption at around 10 kg and predicted its growth to 12 kg by 2020. Taking the current rural population at around 0.87 billion, steel consumption in the rural sector comes to 8.7 million tonne. The setting up of steel fabrication facility in the near vicinity of a cluster of villages can significantly raise this volume and help India leapfrog the ladder in per capita steel consumption index. It may also play a small role in inclusive growth process.
* The author is DG, Institute of Steel Growth and Development. The views expressed are personal