The Iron And Steel Industry In India – The Present Scenario and Future Prospects

Posted on September 1, 2011 in Business and Economy

By Ankit Jain

The steel industry is often considered to be an indicator of economic progress, because of the critical role played by steel in infrastructural and overall economic development. The per capita usage of steel gives an indication of the technological advancement of a nation.

The present scenario of the industry

India has one of the richest reserves of all the raw materials required for the industry, namely land, capital, cheap labour, iron ore, power, coal etc. Yet we are 5th in the world ranking for production of steel. We produced 66.8 million tonnes in 2010-11, while China, at the top of the list, produced 626.7 million tonnes. Our per capita consumption of steel in India (at 50 kg per annum) is well below the world average (at about 200 kg per annum) and much below that of the developed world (around 350 kg per annum).

Vision 2020 of the Steel Industry in India

The National Steel Policy – 2005 aims at increasing the total steel production of the country to 110 million tonnes per year (in 2019-20) from 38 million tonnes (in 2004-05). This was supposed to require a compounded annual growth of about 7.3%. The total production in 2010 was 66.8 million tonnes. The compounded annual growth from 2005 to 2010 has been more than 9% which is better than the expected growth. But most of these are a result of the brownfield expansion projects of the existing steel companies. But to continue with the same growth rate, we need new Greenfield projects.

The problems faced by the industry in present times

Many steel giants signed MoUs with several state governments (especially Jharkhand, Odisha, Chattisgarh and West Bengal) for new projects but none of them have materialised. It has taken 5 long years for Tata Steel’s Kalinganagar (Odisha) project to complete the rehabilitation and resettlement process. JSW’s proposed Salboni plant (W.B) hasn’t been allotted the required amount of land, and moreover the government, recently, took control over about 400 acres of land bought by the company because of a state rule that any outsider can’t buy more than 24 acres of village land. POSCO is facing massive resistance from the natives of Jagatsinghpur (Odisha) for land acquisition while many other steel plants are awaiting aid from the government in terms of either land or infrastructure.

What are we losing?

The steel industry has given rise to a good number of townships which are rich, advanced, well maintained and has better lifestyles than the rest of the country. Jamshedpur, Vijaynagar, Bokaro Steel City, Rourkela, Bhilai, Vishakhapatnam are just a few to name. There are many more cities waiting to be added onto this elite list. Other infrastructural development (roads, railways, ports, power) would take place owing the development of the steel industry. Huge amount of employment (10 lakhs jobs per year) would be generated because of this.

But this is sure to take longer than the speculated time if the present rate of land acquisition and the government’s listlessness continues. The government ensuring faster support (in terms of permissions, lands etc.) would mean a faster growth rate of the country, and a step closer to becoming the superpower of the world. Thus one thing which seems very clear is that if Vision 2020 needs to be achieved, then steel industry is where we need to focus.