MUMBAI (CommodityOnline.com) -- From the fledgling 1 million-tonne capacity status at the time of independence in 1947, India has now risen to be the seventh largest crude steel producer in the world and the largest producer of sponge iron.
The steel industry now accounts for a capital base of R90,000 crore and contributes around 6% 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 (400,000) 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 1950s to the early 1970s, the 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. But the trend could not be sustained because economic slowdown adversely affected the pace of growth of the Indian steel industry in the late 1970s. However, this phase was reversed in 1991-1992, when 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 the 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 South Korea-based Posco to set up its 12 million-tonne 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 a 12 million-tonne integrated steel unit at Orissa. The domestic Indian steel producers did not lag behind. Indian conglomerate Tata Steel Ltd.'s $12 billion takeover of Anglo-Dutch giant Corus Group Plc transformed Tata Steel 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 seventh 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 2006-2007, India also rounded off the Tenth Plan period, a phase when both finished steel production and consumption recorded a significant 10% growth on compounded basis - achievements that indicate that a stable foundation for future development in the 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 indicates 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 the Eleventh Plan, i.e., 2011-2012. These would represent 40% and 66% growth rates respectively as compared to 2007-2008, 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 upgrading, environment management and research and development.
By arrangement with www.commodityonline.com.
