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 is the eighth largest crude steel producing country
in the world. 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 several advantageous features which gives the dominant
position to its steel industry on the world map. Some of these are:-
- Establishment of new state-of-the-art steel plants in the country with
lesser dependence on external aid
- Continuous modernization as well
as implementation of de-bottlenecking and technology upgradation schemes
in the older plants
- Improvement in energy efficiency of the plants
in terms of coke rate and power consumption
- Utilisation of better
quality raw materials, such as imported coking coal, accessed from global
sources
- Optimum processing of raw materials like washing of coal,
beneficiation 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 of finished
(carbon) steel, during the period April-December, 2006, has been estimated
at 35.60 million tonnes, which is up by 9.6% over the corresponding period
of the last year. During the same period, the merchant production of pig
iron has been estimated at 3.45 million tonnes (up by 3.6%). Besides,
India has potentialities of becoming a great exporter of steel. During
April- December, 2006, the total volume of finished (carbon) steel exported
has been estimated at 3.50 million tonnes, which is up by 10.9% over the
corresponding period of the last year. While, its import has been estimated
at 2.70 million tonnes, which is lower by 6% over the corresponding period
of the last year. During this period, the apparent consumption of steel
rose by 9.3% so as to reach the level of 31.30 million tonnes.
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:-
- Removing it from the list of industries
reserved for public sector
- Exempting it from compulsory licensing.
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, 2006, 20.5 million tonnes of steel has
been produced by private sector steel units, out of the total production
of 33.15 million tonnes in the country. The private sector units consist
of major steel producers like
Tata
Steel Ltd.,
Essar
Steel Holdings Ltd.,
Jindal
Steel and Power Ltd. (JSPL),
Ispat
Industries ltd. (IIL) etc. as well as relatively smaller and medium
units such as sponge iron plants, re-rolling mills, electric arc furnaces
and induction furnaces.
Under the industrial policy, 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 steel 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. 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. Apart from
this, 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.
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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