Steel plays a vital role in accelerating growth and development of a nation. It is used as a basic material in the manufacture of metal products, electrical machinery, transport equipment, textile, etc and thus considered to be the backbone of the human civilisation. It is a product of large and technologically advanced industry having strong forward and backward linkages in terms of material flow and income generation. In other words, the production and per capita consumption of steel is a major contributor to a country’s gross domestic product (GDP) and an indicator of its industrial and economic strength. Iron ore, manganese ore and chrome ore are the critical raw material inputs for the steel industry. Their timely and assured availability in adequate quantity and quality, on long term basis, is a prerequisite for the rapid and orderly growth of the sector.
India has emerged as the fifth largest crude steel producing country in the world in the year 2006 as against eighth position three years back. It is endowed with richest iron and coal ore mines. Its cost of production of steel is comparatively much lower than that in other countries. It has also maintained its lead position as the world’s largest producer of direct reduced iron or sponge iron. Sponge iron production grew at a CAGR of 22% to reach a level of 18.35 million tonnes in 2006-07 compared to 7.86 million tonnes in 2002-03. However, India is expected to become the second largest producer of steel in the world by the year 2015. It is also likely to achieve a steel production capacity of nearly 124 million tonnes by the year 2011-12.
India has several advantageous features which gives the dominant position to its steel industry on the world map. Some of these are:- (i) establishment of new state-of-the-art steel plants in the country with lesser dependence on external aid; (ii) continuous modernization as well as implementation of de-bottlenecking and technology upgradation schemes in the older plants; (iii) improvement in energy efficiency of the plants in terms of coke rate and power consumption ; (iv) utilisation of better quality raw materials, such as imported coking coal, accessed from global sources; (v) optimum processing of raw materials like washing of coal, benefication and sintering of iron ore; etc.
The global integration of the economy as well as the rising demands by sectors like infrastructure, real estate and automobiles, both at home and abroad, has made Indian steel as one of the fastest growing industry. As per the available information, the production, consumption and export of finished steel for the period April-December, 2007 grew by 6.6%, 12.3 % and 9.1 % respectively as compared to the corresponding period of the previous year. Imports of finished steel during the period (April-December, 2007) were up by 68.7 % over the corresponding period of the previous year. The pace of consumption growth has thus out paced production growth and the country has become a net importer of steel.
The table reflecting the production, consumption, import and export of finished steel and crude steel from the year 2002-03 onwards:-
|
(in million
tonnes) |
|
|
Items |
2002-03 |
2003-04 |
2004-05 |
2005-06 |
2006-07 |
2007-08*
(April - December) |
|
Finished Steel including
Alloy Steel |
|
|
Production |
37.166 |
40.709 |
43.513 |
46.566 |
52.529 |
40.117 |
|
|
Consumption |
30.677 |
33.119 |
36.377 |
41.433 |
46.783 |
36.992 |
|
|
Import |
1.663 |
1.753 |
2.293 |
4.305 |
4.927 |
5.325 |
|
|
Export |
4.517 |
5.207 |
4.705 |
4.801 |
5.242 |
3.850 |
|
| Crude Steel |
Production |
34.707 |
38.727 |
43.437 |
46.460 |
50.817 |
39.608 |
The 'Ministry
of Steel' is a nodal authority for the overall development of iron
and steel industry in India. It plays the role of facilitator, providing
broad directions and assistance to new and existing steel plants, in the
liberalized scenario. Its major activities include:-
- Coordinating and planning for the growth of the industry,
including re-rolling mills, alloy steel and ferro alloy industries,
refractories, etc both in the public and private sectors
- Formulating policies in respect of production, pricing,
distribution, import and export of iron and steel, ferro alloys and
refractories
- Developing input industries relating to iron ore, manganese
ore, chrome ore and refractories etc, required mainly by the steel industry;
- Identifying infrastructural and related facilities required
by steel industry so that their absence does not lead to bottlenecks
in its future growth;
- Making presentations to the financial institutions and
banks highlighting the emerging scenario and technological issues involved
in the development of the steel industry; etc.
Several Public Sector Undertakings (PSUs) are functioning
under the administrative control of the Ministry for the expansion and
progress of the industry. These are:-
The economic reforms initiated by the Government since 1991 have added new dimensions to the industrial growth in general and the steel industry in particular. Accordingly, several policy changes have been announced for the sector, from time to time, by the Government of India. The major being, the New Industrial policy which had opened up the iron and steel sector for private investment by:- (i) removing it from the list of industries reserved for public sector; and (ii) exempting it from compulsory licensing. Iron and steel has been made one of the high priority industries. Price and distribution controls have been removed as well as foreign direct investment upto 100% (under automatic route) has been permitted, with a view to make the industry efficient and competitive. The trade policy has been liberalised making import and export of iron and steel items freely allowable, with almost no quantitative restrictions on them. Peak import tariff rates were also reduced from more than 100% to about 30% average, which has since been reduced to 5%.
Since then, the private sector have been playing an important and dominant role in production and growth of the steel industry. They not only enhance the productive capacity of primary and secondary steel, but also contribute substantial value addition in terms of quality, innovation and cost effectiveness. During the period April-December, 2007, private sector steel players have contributed nearly 67% of total steel production of 38.08 million tonnes to the country. They consist of major steel producers like Tata Steel Ltd.; Essar Steel Holdings Ltd.; Jindal Steel and Power Ltd. (JSPL); Ispat Industries ltd. (IIL); Bhushan Power & Steel Ltd.; etc. as well as relatively smaller and medium units such as sponge iron plants, re-rolling mills, electric arc furnaces, mini blast furnace units, induction furnaces, cold-rolling mills and coating units.
Other policy measures such as convertibility of rupee on trade account, permission to mobilise resources from overseas financial markets and rationalisation of existing tax structure have also benefitted the Indian steel industry. The Government has envisaged considerable additions to capacity in the steel sector specially from the sponge iron segment. It has also given licences for setting up electric arc furnace units (mini steel plants), which account for 30% of the steel production in the country, producing mild steel as well as alloy steel. Further, all efforts are being made to ensure that the sector continues to meet the requirements of small scale industries, exporters of engineering goods and North-Eastern region of the country, as well as that of strategic sectors such as defence and railways.
Another important initiative, undertaken by the Ministry,
has been the announcement of the 'National
Steel Policy' in 2005 which set out the Government's vision for future
growth of the sector. The policy largely aims to develop a modern and
efficient steel industry of world standards, catering to the diversified
steel demands. It focuses on achieving global competitiveness not only
in terms of cost, quality and product-mix, but also in terms of global
benchmarks of efficiency and productivity. It seeks to enhance indigenous
production of steel to 110 million tonnes (mT) per annum by 2019-20 from
the 2004-05 level of 38 mT. This implies a compounded annual growth of
7.3 percent per annum.
Domestic and foreign investors have shown a great deal of interest in setting up steel capacities in the country. Prospective investors include existing public sector as well as private sector manufacturers, reputed foreign manufacturers, sponge iron makers going in for forward integration, as well as small rolling mills trying to get into backward integration, among others. As per the latest information, 194 MoUs have been signed in various States with intended capacity of around 243 million tonnes, with an investment of over Rs. 5.15 lakh crore. With major investment plans in the States of Odisha, Jharkhand, Karnataka, West Bengal and Chhattisgarh, actual production may considerably exceed the 110 million tonnes annual steel production by 2019-20 envisaged in the National Steel Policy.
The increasing presence of the Indian steel companies in
the world market with a wide-ranging export basket, including technologically
sophisticated products, is a pointer to the enhanced competitiveness of
this industry. They are having an efficient and strong base, with rising
level of per capita consumption, which is promoting massive industrialisation
in the country as well as improving standard of living of the people.
Further, there has been an increase in the research, design and development
activities, largely carried out by the existing iron and steel plants;
national research laboratories; academic institutions; etc. The significant
improvements have been made in the areas of iron and steel making processes,
upgradation of raw materials, product development, increase in productivity
as well as reduction in energy consumption. All this shows that there
exists innumerable investment opportunities in the sector both for domestic
and foreign investors.
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