ABSTRACT
Investments are likely to flow into the steel industry from sectors with profits lower than those in steel, while investments from the steel sector are likely to go out into the sectors with higher profitability. Therefore, relative profitability of the steel industry is very important. The differences in profits are very sharp in the USA, EU, Japan, China and even the emerging markets; but, for India, the difference between the profits of all firms and the steel firms are narrower, even, the narrowest. The diversion of funds away from the steel business happened, because companies in steel wanted to graduate into sectors with higher profits. The sectors with the highest profits, namely mining, electricity and services, have stagnated, perhaps, due to the rules and laws of the country. Though the Indian steel industry has dampened much, since its peak in the 1980s, compared to the steel industry in the rest of the world, Indian steel firms earn the best profits.
