Steel Industry in India is undergoing a major boom.
Here is a brief profile of Iron & Steel Industry in India.
Steel Industry in India
Steel Industry in India is on an upswing because of the strong global
and domestic demand. India's rapid economic growth and soaring demand by
sectors like infrastructure, real estate and automobiles, at home and
abroad, has put Indian steel industry on the global map. According to
the latest report by International Iron and Steel Institute (IISI),
India is the seventh largest steel producer in the world.
The origin of the modern Indian steel industry can be traced back to
1953 when a contract for the construction of an integrated steelworks in
Rourkela, Orissa was signed between the Indian government and the German
companies Fried Krupp und Demag AG. The initial plan was an annual
capacity of 500,000 tonnes, but this was subsequently raised to 1
million tonnes. The capacity of Rourkela Steel Plant (RSP), which
belongs to the SAIL (Steel Authority of India Ltd.) group, is presently
about 2 million tonnes. At a very early stage the former USSR and a
British consortium also showed an interest in establishing a modern
steel industry in India. This resulted in the Soviet-aided building of a
steel mill with a capacity of 1 million tonnes in Bhilai and the
British-backed construction in Durgapur of a foundry which also has a
million tonne capacity.
The Indian steel industry is organized in three categories i.e., main
producers, other major producers and the secondary producers. The main
producers and other major producers have integrated steel making
facility with plant capacities over 0.5 mT and utilize iron ore and
coal/gas for production of steel. The main producers are Tata Steel,
SAIL, and RINL, while the other major producers are ESSAR, ISPAT and
JVSL. The secondary sector is dispersed and consists of: (1) Backward
linkage from about 120 sponge iron producers that use iron ore and
non-coking coal, providing feedstock for steel producers; (2)
Approximately 650 mini blast furnaces, electric arc furnaces, induction
furnaces and energy optimizing furnaces that use iron ore, sponge iron
and melting scrap to produce steel; and (3) Forward linkage with about
1,200 re-rollers that roll out semis into finished steel products for
consumer use.
Structural Weaknesses of Indian Steel Industry
- Although India has modernised its steelmaking considerably,
however, nearly 6% of its crude steel is still produced using the
outdated open-hearth process.
- Labour productivity in India is still very low. According to an
estimate crude steel output at the biggest Indian steelmaker is
roughly 144 tonnes per worker per year, whereas in Western Europe
the figure is around 600 tonnes.
- India has to do a lot of catching in the production of stainless
steel, which is primarily required by the plant and equipment,
pharmaceutical and chemical industries.
- Steel production in India is also hampered by power shortages.
- India is deficient in raw materials required by the steel
industry. Iron ore deposits are finite and there are problems in
mining sufficient amounts of it. India's hard coal deposits are of
low quality.
- Insufficient freight capacity and transport infrastructure
impediments too hamper the growth of Indian steel industry.
Strengths of Indian Steel Industry
- Low labour wage rates
- Abundance of quality manpower
- Mature production base
- Positive stimuli from construction industry
- Booming automobile industry
Outlook
The outlook for Indian steel industry is very bright. India's lower
wages and favourable energy prices will continue to promise substantial
cost advantages compared to production facilities in (Western) Europe or
the US. It is also expected that steel industry will undergo a process
of consolidation since industry players are engaged in an unfettered
rush for scale. This is evident from the recent acquisition of Corus by
Tata. The deployment of modern production systems is also enabling
Indian steel companies to improve the quality of their steel products
and thus enhance their export prospects.
Note: The above information was last updated on 21-07-2007
