The steel industry in India is among the most important industries in the country. In 2019, India became the second-largest steel producer in the world surpassing Japan. India’s finished steel consumption is anticipated to increase manifold in 2030-31. Read here to know the history and growth of the steel industry in India.
Metal consumption has been one of the main driving causes behind industrialization.
Steel has long held the top position among metals. Steel is both a raw material and an intermediary product, therefore its production and consumption are commonly used as indicators of a nation’s economic success.
Therefore, it would not be overstating the case to say that the steel industry is the backbone of any economy and has always been at the forefront of industrial advancement.
The steel industry in India is divided into three groups: primary producers, secondary producers, and large producers.
History of the Steel industry in India
India was one of the first countries to practice manufacturing metals, as early as 1600 BCE. During the first millennium BCE, India experienced significant advancements in iron metallurgy. During this time of tranquil settlements, iron metallurgy was mastered and technology advanced.
During the politically stable Maurya period (322–185 BCE), major technological developments in the field of metallurgy were made. The first mention of iron use in India that was written in the West was by the Greek historian Herodotus (431–425 BCE).
However, the Iron and Steel industry did not establish its foundation in India until the year 1907.
In the early 1800s, efforts were launched in earnest to construct iron and steel production facilities.
- The first attempt, made in 1808 by Mr. Duncan of the East India Company, failed miserably.
- Josiah Marshall Heath launched a second attempt in 1830 when he built the world’s first iron and steel facility in Porto Novo, Madras. However, this plant was unable to succeed and was closed in 1860.
The Bengal Iron Company Ltd was established in 1926 and took over the Bengal Iron Works established in 1870. The company with the usage of better iron ore saw the first profits in the industry.
Jamsedji Nusserwanji Tata founded the modern-day Tata Steel, formerly known as TISCO, in Jamshedpur in the year 1907. TISCO was running the largest steel mill in the entire British Empire by 1939. Currently, this corporation ranks as the seventh-largest steel manufacturer in the world and the top iron and steel producer in India.
The IISCO plant was set up in 1919 at Burnpur and in 1930 the Bengal Iron Company merged with IISCO.
Indian Steel Industry after independence
Post-Independence India’s steel industry has flourished tremendously. India produced an estimated 16.9 lakh tonnes of pig iron between 1950 and 1951.
The three major actors in the private sector under the first plan for iron and steel in India were TISCO, IISCO, and Mysore State Iron and Steel Works.
The Hindustan Steel Limited (HSL), a government-owned company, set up 3 plants in 1950. This company came into being through the efforts of Prime Minister Jawaharlal Nehru.
- Hindustan Steel Limited was set up on January 19, 1954.
- Hindustan Steel (HSL) was initially designed to manage only one plant that was coming up at Rourkela.
HSL comprised four plants:
- Bhilai Steel Plant
- Rourkela Steel Plant
- Durgapur Steel Plant
- Alloy Steel Plant
The Steel Authority of India (SAIL) was launched in the year 1973. It is a government organization that manages all the major steel plants in India like Bhilai, Bokara, Rourkela, and Burnpur. This organization started managing Iron and Steel in 1976.
- The Ministry of Steel and Mines drafted a policy statement to evolve a new model for managing industry in 1972.
- On this basis, the concept of creating a holding company to manage inputs and outputs under one umbrella was mooted. This led to the formation of the Steel Authority of India Ltd.
- The company, incorporated on January 24, 1973, was made responsible for managing five integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela, and Burnpur, the Alloy Steel Plant, and the Salem Steel Plant.
- In 1978 SAIL was restructured as an operating company.
The growth in the Indian steel sector has been driven by the domestic availability of raw materials such as iron ore and cost-effective labor. Consequently, the steel sector has been a major contributor to India’s manufacturing output.
Steel Industry in India
In the past 10–12 years, India’s steel sector has expanded significantly. Production has increased by 75% since 2008, while domestic steel demand has increased by almost 80%. The capacity for producing steel has grown concurrently, and the rise has been largely organic.
- India is home to the fifth-highest reserves of iron ore in the world.
- As of April 2022, India was the world’s second-largest producer of crude steel.
- In FY22, India’s export rose by 25.1%, compared with 2021.
The steel industry and its associated mining and metallurgy sectors have seen major investments and developments in the recent past.
- India was the largest producer of Direct Reduced Iron (DRI) or Sponge Iron in the world in 2021.
- India is the 2nd largest consumer of finished steel preceded by China as the largest steel consumer as per the World Steel Association.
In September 2022, Steel Authority of India Limited (SAIL), a Maharatna PSU, supplied 30,000 tonnes of the entire DMR grade specialty steel for the nation’s first indigenously built Aircraft Carrier INS Vikrant.
The secondary steel sector in India currently contributes over 40% of the total capacity and it will need to play a crucial role for India to reach 300 MT capacity.
The need is to identify challenges to capacity expansion in the country with a special focus on secondary steel and to correspondingly discuss suggestions on alleviating these.
- Despite being the 3rd largest steel consumer in the world, India has per capita steel consumption that is only one-third of the world’s average.
- Low per capita consumption due to overall poverty compared to the world average decreases the incentive to set up huge plants to take advantage of economies of scale.
- Despite being a small share of imports by quantity, alloy, and stainless steel contribute disproportionately to the import bill by value.
- Few Indian entities can establish large factories to benefit from economies of scale utilizing the equity route because of their limited resources due to low per capita incomes. As a result, the majority of factories rely on borrowing and debt finance.
- India invests significantly less than the rest of the world in technology, research, and development. The same holds for the production and consumption of steel, as it has for many years.
- The technology utilized in India up until recently needed a lot of power, was very dirty, and used a lot of water.
- India is at a disadvantage when it comes to producing steel the way it wants to due to a lack of electricity. With the correct balance of thermal and renewable energy, there might be some relief.
- For every tonne of iron ore extracted, there is a lot less coal available, necessitating coal imports to maintain captive power plants. India receives coal primarily from Australia and Indonesia. Australia has been increasing its coal costs, which has a direct impact on the cost of iron and steel in India.
Government initiatives for the steel sector
Some of the recent Government initiatives in this sector are:
National Steel Policy (NSP) 2017: The new Steel Policy enshrines the long-term vision of the Government to give impetus to the steel sector.
- It seeks to enhance domestic steel consumption and ensure high-quality steel production and create a technologically advanced and globally competitive steel industry.
- The policy also envisages domestically meeting the entire demand for high-grade automotive steel, electrical steel, special steels, and alloys for strategic applications and increasing domestic availability of washed coking coal to reduce import dependence on coking coal from about 85% to around 65% by 2030-31.
The Government has also announced a policy for providing preference to domestically manufactured Iron & Steel products in Government procurement.
The government has also approved a Production-linked Incentive (PLI) Scheme for Specialty Steel. It is expected that specialty steel production will become 42 million tonnes by the end of 2026-27.
The Ministry of Steel is facilitating the setting up of an industry-driven Steel Research and Technology Mission of India (SRTMI) in association with the public and private sector steel companies to spearhead research and development activities in the iron and steel industry.
The Government of India raised import duty on most steel items twice, each time by 2.5%, and imposed measures including anti-dumping and safeguard duties on iron and steel items.
Given the importance of a wide range of sectors on steel production as India strives to become a manufacturing powerhouse through governmental initiatives like Make in India, the steel industry in India has emerged as a key emphasis area.
India ranks as the world’s second-largest producer of steel and is on track to surpass China as the world’s second-largest consumer of steel, with the sector contributing around 2% of the country’s GDP.
India continues to employ concrete in the majority of its structures, despite its enormous population and several incentives to experiment with different methods.
- Steel is used far more frequently to construct columns and buildings in the west, the Gulf, and other settled areas.
- Using steel van produce higher skyscrapers, requires considerably less time to assemble, requires much less maintenance, and helps lower the weight of projects.
- There are numerous examples, including the Empire State Building in New York, the Taipei 101 Tower in Taiwan, the U.S. Steel Tower in Pittsburgh, Pennsylvania, the Shun Hing Square Tower in Shenzhen, China, and the Burj Khalifa in Dubai, which is the most well-known of them all.
India’s export production capability and industry both have the potential to aid the country in regaining a favorable steel trade balance.
India’s relatively low per capita steel consumption and the anticipated increase in demand due to rising infrastructure construction and the flourishing automobile and railroad sectors present enormous growth potential.
-Article written by Swathi Satish
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