India Faces 30% Shortage of CRGO Steel Impacting Power Sector: Report

New Delhi, Dec 16 (KNN) India’s power sector is grappling with a significant 30 per cent shortage of Cold-Rolled Grain-Oriented (CRGO) steel, a critical material used in electric motors and transformers, according to a recent study by the Global Trade Research Initiative (GTRI).

The report reveals that domestic production of CRGO steel meets only 10-12 per cent of the country's demand, forcing India to rely heavily on imports.

The shortage stems from delays in license renewals by the Bureau of Indian Standards (BIS) for foreign suppliers, particularly from Japan, South Korea, and China.

These licenses, necessary for the import of CRGO steel under a quality control order, are set to expire soon, creating uncertainty in the power sector.

The BIS process, while ensuring quality, restricts the supply to a limited number of approved vendors and grades, leading to longer lead times and reduced supply.

In FY 2024, India required 400,000 tonnes of CRGO steel. However, domestic production was limited to just 50,000 tonnes, and the country imported 239.2 thousand tonnes from international markets.

After exports, only 277.8 thousand tonnes remained for domestic use, leaving a shortfall of 122.2 thousand tonnes, or 30.6 per cent of total demand.

India’s CRGO demand is projected to grow annually by 10-12 per cent, fueled by the expanding power sector and the government’s push to integrate 500 GW of renewable energy by 2030.

Furthermore, the Bureau of Energy Efficiency's mandate for a star-label upgrade for transformers, effective January 2025, will increase demand for higher-grade CRGO steel.

The shortage poses a threat to India’s energy and manufacturing goals and could also limit transformer and motor exports. Small and medium enterprises (SMEs), which typically require smaller amounts of CRGO steel, are facing sharp price increases due to limited availability.

To address this, the GTRI report recommends prioritising local production, considering CRGO as a strategic material. It also calls for an urgent review of the BIS process, including expanding the list of approved CRGO grades and suppliers.

Building a resilient domestic production base, supported by global partnerships and R&D, will be crucial for India to meet its energy targets and reinforce its position in the global power sector.

(KNN Bureau)