01 Oct , 2022 By : Monika Singh
India is at a momentous point in its journey towards becoming one of the top three economies in the world. It is the time to take decisive next steps to accelerate the pace of reform. With the economic collapse caused by Covid-19 slowly rescinding, a rapid return to a sustained GDP rise of about 8.5 percent annually, driven by high productivity and growth, will create a definite path to this goal.
Critical sectors such as infrastructure, manufacturing, construction and agriculture will spearhead this growth and I have fervently believed that commodities, especially zinc, will fuel this reform significantly. Many might argue the extent of impact the fourth most used metal in the world will actually have. Decades of economic trends which substantiate the existing impact and the undeniable future potential, create a solid case for the humble metal.
The commodities market in India and worldwide, despite facing some headwinds at the peak of the pandemic, has shown resilience. Zinc, in particular, has fared decently well. Globally, the zinc market is worth $40 billion annually and it remained one of the best performing commodities of 2020 with returns of 19.73 percent.
Zinc is widely used across industries – infrastructure, manufacturing, healthcare, automotive, although the most percentage of steel produced is used for galvanizing steel. Even then, out of the approximately 100 million tons of steel produced every year in India, less than 10 percent is coated with zinc. It is estimated that India loses about 4 to 5 percent of its GDP every year due to corrosion-related costs. Investing in a metal such as Zinc not just enhances the longevity of infrastructure and provides safety but adds to the GDP of the country by reducing the expenditure on frequent replacements. This gains all the more relevance at a time when India is wanting to overcome the Covid setbacks and attain a fast progression on the road to becoming a $5 trillion economy by 2024-2025. The recent Government announcement of a $1.3 trillion national master plan in infrastructure, ‘Gati Shakti’, to reduce costs and boost the economy is testament to the need of integral and effective reforms to build a stronger sector.
It is also amply clear that manufacturing and construction are sectors that would need to amplify the most, estimated to add 9.6 and 8.5 percent annual GDP growth from 2023 to 2030 according to a McKinsey study. The research also states that India’s logistics costs stand at 13 to 14 percent of GDP and are high by global standards. They are skewed towards high-cost road transport which accounts for 60 percent of logistics in comparison to 37 percent in the United States. One of the ways India can optimize its modal mix is by investing in low-cost rail infrastructure with technology advancements that make it modern.
Zinc can play a critical role here as railway tracks galvanized with zinc last longer and thus will prove to be cost effective in the long run. This also sits well with the government nudge towards asset monetization that includes modernization of railways, in which zinc is a key enabler and thus its demand is sure to see a surge.
The impact of Zinc is the agriculture sector is also very rarely talked about. Zinc plays an important role as it enhances crop productivity. Crop productivity is crucial in addressing higher food demands and thus Zinc will be as well. As India progresses to reach its goals of a one of the most flourishing global economies, the agriculture sector will be a key enabler in the journey.
The path to a trillion-dollar economy is also poised to be a path of transition to a more sustainable future, in which zinc can be a torchbearer. Zinc-air batteries are fast emerging as an efficient clean energy-storage solution and can also provide electricity in remote areas. It can also protect the lighter next-gen steels that allow for vehicle deigns with greater fuel efficiency and lower emissions. Zinc is also an enabler of a circular economy as it can be recycled and can also very easily be returned to nature if used in the agricultural sector. With the possibility to recover, restore and reuse, its contribution to the circular economy can take us closer to achievement of UN SDGs.
The government investments in zinc and favorable policy reforms will be a key enabler in India’s economic success. It becomes imperative to integrate its usage across sectors which will not only help us to build a stronger economy but also be important in India’s transition to a modern, sustainable superpower.