Steel Sector : Upward growth
The Indian Steel Industry, is today acknowledged for its product quality. This is reflected by trends of rising exports and Indian companies mark in the global Mergers & Acquisitions market. From the fledgling one-million tonne capacity status at the time of Independence, India has now risen to be the 7th largest crude steel producer in the world and the largest producer of sponge iron. The steel industry now accounts for a capital base of Rs. 90,000 crore and contributes around 6 per cent of the Gross National Product, commanding a weight of 5.13 in the Index of Industrial Production and provides direct employment to more than 4 lakh people from being a negligible global presence.
The first major change came during the first three Five Year Plans (1952-1970), when in line with the economic order of the day, the iron and steel industry was earmarked for state control. From the mid 50s to the early 70s, Government thus set up large integrated steel plants in the public sector at Bhilai, Durgapur, Rourkela and Bokaro.
The large-scale capacity creation in the public sector during these years contributed to making India the 10th largest steel producer in the world as crude steel production grew markedly to nearly 15 million tonnes in the span of a decade from a mere 1 million tonnes in 1947. But the trend could not be sustained as from the late 70’s onwards, economic slowdown adversely affected the pace of growth of the Indian steel industry. However, this phase was reversed, when in 1991-92, the country replaced economic controls by liberalization and deregulation in the context of globalization.
The system therefore, underwent marked changes. For steel makers, opening up of the economy opened up new channels of procuring their inputs at competitive rates from overseas markets as also new markets for their products. It also led to greater access to information on global operations/techniques in manufacturing. This along with the pressures of a competitive global market increased the need to enhance efficiency levels so as to become internationally competitive. The steel consumer, was now able to choose items from an array of goods, be it indigenously manufactured or imported and this freedom to choose established the sovereignty of the consumer and made steel producers geared to provide a service level in tune with the needs of the consumers. With the opening up of economy in 1992, the country thus experienced rapid growth in steel making capacity.
National Steel Policy
The rapid pace of growth of the industry and the observed market trends called for some guidelines. Thus was born the concept of the National Steel Policy, with the aim to provide a roadmap of growth and development for the Indian steel industry. Released in 2005, it laid down the long-term goal that India should become self-reliant and globally competitive in the steel sector and set an ambitious vision for the country to produce 110 million tonnes of steel by 2020. The rejuvenated market, witnessed announcements of mega expansion plans of leading domestic producers, in the form of greenfield and brownfield projects in different parts of the country. The decision of Posco to set up their 12 million tonnes integrated steel plant in Orissa also gave the Indian steel industry a feel of ‘globalization’ . This was soon followed by Mittal Group’s announcement of plans to set up 12 million tonnes integrated steel unit at Orissa. The domestic Indian steel producers did not lag behind. Indian conglomerate Tata Steel’s $12 billion takeover Anglo-Dutch giant Corus Group Plc, transformed Tata Steel Ltd into the world’s fifth largest steel producer, a benchmark event in the history of Indian steel industry. Such developments only proved that the Indian steel has come of age.
Besides achieving the rank of the 7th largest global crude steel producer, India also made a mark globally in the production of sponge iron/Direct Reduced Iron. Due to a mushrooming growth of coal based sponge iron units in key mineral-rich pockets of the country, domestic production of sponge iron increased rapidly, enabling the country to achieve and maintain the number one position in the global market. In 2006-07, India also rounded off the Tenth Plan period, a phase when both finished steel production and consumption recorded a significant 10 per cent growth, on compounded basis – achievements that indicate that a stable foundation for future development Indian steel industry has been laid. With a series of mega projects – either being implemented or in the proposal stage, which once operational will re-write the structure of steel industry and its dynamics; and a domestic economy carrying forward the reform process further – the future of Indian Steel is definitely optimistic. This in fact is reflected in the projections for the Eleventh Plan Period, which indicate that for finished non-alloy steel, domestic steel demand would reach 70 million tonnes and steel supply would touch 77 million tonnes by the end of the terminal year of Eleventh Plan, i.e. 2011-12. These would represent 40 per cent and 66 per cent growth rates respectively as compared to 2007-08, the first year of the Plan period.
In this journey of progress, the Indian Steel Industry has also taken significant steps in improvement of productivity, conservation of natural resources and energy, import substitution, quality upgradation, environment management and research and development.
Role of the Ministry
The pre-de-regulation phase has seen the Ministry of Steel in the role of a regulator, predominantly – which was essential, given the operating economic conditions, the limited presence of industry and the scarcity of key raw material for steel making at home for a host of industries and the myriad constraints of sourcing from abroad. Through skillful and judicious decisions on allocation and pricing and formulating related policy measures, the Ministry of Steel has played an important role in taking the steel industry forward in this phase.
In the post-de-regulation period, the role of the Ministry of Steel has primarily been that of a facilitator for the Indian steel industry, being responsible for the planning and development of iron and steel industry, development of essential inputs such as iron ore, limestone, dolomite, manganese ore, chromites, ferro-alloys, sponge iron, and other related functions. In its present-day role, the Ministry is extending all possible support for the development of the iron and steel sector in the country.
Through the setting up of “Institute for Steel Development and Growth (INSDAG)” in Kolkata the Ministry is also helping in promoting, developing and propagating the proper and effective use of steel and increasing intensity of steel usage particularly in the construction sector and in rural and semi urban areas,
An Empowered Committee under the Chairmanship of Secretary (Steel) provides overall direction to research efforts on iron and steel in the country and approve specific research projects placed before it for funding, fully or partially, from the Steel Development Fund (SDF).
Through the National Steel Policy – the first Vision document of its kind, the Ministry of Steel has laid down the Long Term Vision of Growth for the Indian steel industry and efforts are currently under way to give form to each individual area of operation, as stated in the Policy, so as to ensure its flawless implementation.
The Indian Steel Industry is currently going through an expansionary phase backed by liberalized policy environment. Prospects of domestic demand appear to be excellent, driven by high investment rate, accelerated growth in the manufacturing industry and expansion in physical infrastructure creation. In this scenario, the Ministry of Steel assumes an important facilitating role. While direct Government involvement may no longer be required, the Ministry would have to continue the necessary support particularly in areas like providing essential infrastructure facilities, assuring easy availability of critical inputs such as iron ore, coal, gas and power and creation of an environment for facilitating skilled manpower development. This will enable the Indian Steel Industry to ride on the strength of its present assets like availability of iron ore, low wage rates, ongoing modernization and expansion projects and rise many rungs beyond the present stature in the coming years.
*Inputs from the Ministry of Steel
(Release ID :29575)