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Iron And Steel Industry In India - Past, Present And Future (Part 2)



    The first notable attempt to revive steel industry in India was made in 1874 when the Bengal Iron Works (BIW) came into being at Kulti, near Asansol in West Bengal. However, forty-four years before that, in 1830 to be precise, a foreigner, named Joshua Marshall Heath, had set up a small plant at Porto Novo on Madras Coast. Heath produced in his plant pig iron at the rate of forty tonnes a week. His method of iron-making needed approximately four tonnes of charcoal to produce one tonne of low quality pig iron which proved to be too expensive for Heath to carry on in the face of stiff competition from the British steel industry. The BIW made considerable improvement in the process of iron and steel making. It used coke as the fuel instead of charcoal. But the plant fell sick as the source of funds dried up. It was taken over by the Bengal Government and was rechristened as Barakar Iron Works. In 1889 the Bengal Iron and Steel Company acquired the plant and by the turn of the century the Kulti plant became a success story. It produced 40,000 tonnes of pig iron in 1900 and continued to produce the metal until it was taken over by Indian Iron and Steel Company (IISCO) in 1936.



    For modern India’s iron and steel industry August 27, 1907 was a red-letter day when the Tata Iron and Steel Company (TISCO) was formed as a Swadeshi venture to produce 120,000 tonnes of pig iron. The TISCO plant at Sakchi (renamed Jamshedpur) in Bihar, started pig iron production in December 1908 and rolled out its first steel the following year. TISCO had expanded its production capacity to one million tonnes ingot by the time the country achieved freedom. The Tatas, as Gandhiji said, represented the "spirit of adventure" and Jamsetji Tata, in the words of Jawaharlal Nehru," laid the foundation of heavy industries in India". The British rulers disfavoured this and other attempts to start indigenous industry. It was chiefly with the help of American experts that the Tatas started their industry. Its childhood was precarious but the war of 1914-18 gave it a fillip. Again it languished and was in danger of passing into the hands of British debenture holders. But nationalist pressure saved it. In 1918, soon after the war, Indian Iron and Steel Company (IISCO) was formed. The then Mysore government also decided to start an iron works at Bhadravati. While IISCO started producing pig iron at Burnpur in 1922, the Mysore Iron and Steel Works took about 18 years to start its plant. Meanwhile, the Bengal Iron Works went into liquidation and merged with IISCO. The Steel Corporation of Bengal (SCOB) formed in 1937, started making steel in its Asansol plant. Later in 1953, SCOB merged with IISCO.



Prime Minister Nehru firmly believed that "no country can be politically and economically independent unless it is highly industrialized and has developed its resources to the utmost". Nehru’s ideas about India’s development were broadly incorporated in free India’s first Industrial Policy Resolution adopted by the Constituent Assembly in 1948. The resolution officially accepted the principle of mixed economy. Industries were divided into four categories. In the first category were strategic industries which were made the monopoly of the Government. In the second category were six industries which included, among others, coal, iron and steel.


Iron And Steel Industry In India - Past, Present And Future (part 1)

The history of steel-making in India can be traced back to 400 BC when the Greek emperors used to recruit Indian archers for their army who used arrows tipped with steel. Many more evidences are there of Indians’ perfect knowledge of steel-making long before the advent of Christ. Archaeological finds in Mesopotamia and Egypt testify to the fact that use of iron and steel was known to mankind for more than six thousand years and that some of the best products were made in India. Among the widely-known relics is the Iron Pillar near Qutab Minar in Delhi. The pillar, built between 350 and 380 AD, did not rust so far -----an engineering marvel that baffles the scientists even today. Yet another engineering feat is the famous Sun Temple at Konark in Orissa, built around 1200 AD, where steel structural were used for the first time in the world.


    These were the halcyon days when India flourished in all directions and when its prosperity was a matter of envy for the foreigners. But as ill luck would have it, India’s prosperity gave way to poverty after the advent of the foreign rule. India’s indigenous industry languished because of a deliberate policy of the colonial rulers to make the country only a supplier of raw materials.


    Steel Role plays a vital role in the development of any modern economy. The per capita consumption of steel is generally accepted as a yardstick to measure the level of socio-economic development and living standards of the people. As such, no developing country can afford to ignore the steel industry.

Indias Target For 100 Mt Steel Production By 2018 (Part 2)

(iv) Ispat Industries Ltd has planned to increase its production capacity at its Dolvi plant in Maharashtra from 2.5 Mtpy to 3.2 Mtpy in 2004-05 at an investment of Rs. 1,000 crore. With balancing and de-bottlenecking, the capacity for production of hot-rolled steel will reach 3.6 Mtpy by 2005-06.

(v) JVSL is installing a new Blast Furnace and has planned to expand its hotmetal capacity from the existing 1.6 Mtpy to 2.5 Mtpy by 2004-05 and further to 4.0 Mtpy by 2005-06 at an investment of Rs. 2,500 crore

(vi) Essar Steel Ltd is setting up a 1 Mtpy capacity Blast Furnace to expand its existing capacity to 3.4 Mtpy by 2005-06. SMS Demag AG of Germany will provide the expertise in the expansion and modernization.

(vii) Jindal Steel & Power Ltd. (JSPL) will expand the steelmaking capacity from 1.15 Mtpy to 2.15 Mtpy at an investment of Rs. 1,200 crore. The company is also expanding its DRI production capacity from the existing 6.5 lakh tonnes per year to 1.31 lakh tonnes per year and will increase its power generation capacity from 205 MW to 255 MW.

(viii) Bhushan Steel & Strips will expand the production of its Khopoli Plant by 0.5 Mtpy for production of CRCA Coils and Sheets GP/GC sheets and coils, precision tubes and CDW tubes for application in the automotive industry.

(ix) Jindal Stainless is expanding its capacity to 0.5 Mtpy by 2004-05 at an investment of Rs. 350 crore to manufacturer value added cupro nickel coins for use in mints.

(x) Tinplate Company of India (TICL) will expand its capacity from 90,000 tpy to 125,000 tpy at an investment of Rs. 46 crore. The company will also invest Rs. 110 crore for the installation of a new tinning line.


Indian Steel Industry Outlook To 2012

Indian steel industry plays a significant role in the country’s economic growth. The major contribution directs the attention that steel is having a stronghold in the traditional sectors, such as infrastructure & constructions, automobile, transportation, industrial applications etc. Moreover, steel variant stainless steel is finding innovative applications due to its corrosion resistive property. India is the fifth largest steel producer at the global front and struggling to become the second largest producer in the coming years.


The country has acquired a central position on the global steel map with its giant steel mills, acquisition of global scale capacities by players, continuous modernization & up gradation of old plants, improving energy efficiency, and backward integration into global raw material sources. Global steel giants from across the world have shown interest in the industry due to its phenomenal performance. For instance - the crude steel production in India registered a year-on-year growth of 6.4% in 2010 and reached 66.8 Million Metric Tons.


Our new research report “Indian Steel Industry Outlook to 2012” says that the, Indian crude steel production will grow at a CAGR of around 10% during 2010-2013. Moreover, with the government proactive incentive plans to boost economic growth by injecting funds in various industries, such as construction, infrastructure, automobile, and power will drive the steel industry in future. The report also reveals that, steel consumption in India is expected to grow significantly in coming years as per capita finished steel consumption is far less than its regional counterparts.


“Indian Steel Industry Outlook to 2012” is an outcome of an extensive research and conceptual analysis of the Indian steel industry. The report provides detail information on steel industry in India. The report also presents an insight into the future outlook of various vertical industry segments, including automotive, aerospace, marine, consumer durables, power, railways, telecom, and housing. The report classifies the finished steel product market into two categories - Alloy and Non-alloy. The report also covers information on industry-wise steel demand, overall steel consumption, production, and trading market. Besides, it provides industry forecast for different market segments.

India steel industry

India is the fifth largest producer of steel in the world. India Steel Industry has grown by leaps and bounds, especially in recent times with Indian firms buying steel companies overseas. The scope for steel industry is huge and industry estimates indicate that the industry will continue will to grow reasonably in the coming years with huge demands for stainless steel in the construction of new airports and metro rail projects. The government is planning a massive enhancement of the steel production capacity of India with the modernisation of the existing steel plants.



Industry Statistics

Government targets to increase the production capacity from 56 million tones annually to 124 MT in the first phase which will come to an end by 2011 - 12. Currently with a production of 56 million tones India accounts for over 7% of the total steel produced globally, while it accounts to about 5% of global steel consumption. The steel sector in India grew by 5.3% in May 2009. Globally India is the only country to post a positive overall growth in the production of crude steel at 1.01% for the period of January - March in 2009.



About 50% of the steel produced in India is exported. India's export of steel during April - December 2008 was 64.4 MT as against 9.7 MT in December 2007. In February 2009, steel export increased by 17% to 12.6 MT from 10.8 MT in the same month last year. More than 50% of steel from India is exported to China. The Government's decision to reduce export duty on iron ore lumps from 15% to 5% has given a major boost to the export of steel.




  • Power shortage hampers the production of steel
  • Use of outdated process for production
  • Lags behind in the production of stainless steel
  • Deficiency of raw materials required by the industry
  • Labor productivity is low. It is 144 tons per worker per year against 600 tons in Western Europe as per estimates.



Inadequate shipment capacity and transport structure




There are many strong points of the industry that makes it one of the leading names in the global steel industry. The rate of labor wage in India is among one of the lowest in the world thereby making large scale production feasible. The boom witnessed in the automobile industry has ensured that the demand for steel is increasing gradually and will continue to do so in the near future. There is huge manpower in India which is another reason why steel production in India is high and the industry is doing pretty well both nationally and internationally.



Numerous steel companies some major projects in the pipeline to invest in India Steel industry. Steel companies have earmarked more than 100 million USD for the setting up of sponge iron units in Koppal and Bellary in Karnataka. As per Investment Commission of India more than 30 billion USD are in the pipeline for investment over the next five years.

Indias Target For 100 Mt Steel Production By 2018 (part 1)

The National Steel Policy has set a target of 60 Mt of steel production by 2010 and to further increase it to a level of 100 Mt by 2018. The major steel producers in India are planning to expand their capacities in tune with the National Steel Policy formulations. Some major expansion programmes of the leading steel producers in the country are mentioned below :

(i) Steel Authority of India (SAIL) has planned to add 1 Mtpy of its 12 Mtpy capacity by 2004-05. The company has planned a seven million tonne capacity addition by 2011-12 to take its total capacity to 20 Mtpy by that period. SAIL has decided to spend Rs. 25,000 crore by 2011-12. The capital expenditure envisaged would double SAIL’s finished steel output to 16.6 Mtpy from the present level of 8.6 Mtpy. While the hot metal production will reach about 20 Mtpy by 2011-12 crude steel output will be around 28.7 Mtpy from the present level of 11.83 Mtpy. SAIL has earmarked Rs. 4,300 crore for its priority schemes to be completed by 2006-07.  The hot metal production at SAIL’s Bhilai Steel Plant will rise to 7 Mtpy from the current level of 4 Mtpy and that Durgapur Steel Plant will increase to 3.2 Mtpy from the present 1.98 Mtpy. Similarly, Rourkela’s hotmetal production will go up to 3 Mtpy by 2011-12 from 1.73 Mt at present and the same for Bokaro will reach 6.5 Mtpy from 4.1 Mtpy at present.

Mr. V. S. Jain, Chairman, SAIL, has explained that the massive growth plan would not affect the company’s financial as the SAIL Board has already envisaged a policy to maintain the debt-equity ratio at 1:1. The capital expenditure will be financed through internal accruals and will be aided by market borrowings, if required.


SAIL has planned to gradually reduce the volume of semi-finished steel products share in the total production of saleable steel to 4 percent by 2011-12 as against 20 percent at present. The capital expenditure plan includes upgradation and modernization of some of the existing assets as well as installation of new facilities. SAIL will develop and modernize its iron ore mines with special thrust on Chirra mines. Extensive plans has also been drawn up to revamp the company’s iron and steel units at its plants at Bhilai, Durgapur and Bakaro.



(ii) Tata Steel is implementing an expansion of 1 Mtpy to be completed by the end of 2005 which will take into capacity at Jamshedpur to 5 Mtpy. The company has planned to invest Rs. 7,800 crore over the next five year to raise its capacity by another 2.4 Mtpy to a total of 7.4 Mtpy by 2009. The bulk of the cost will be met through long-term internal accruals and long term borrowings.

  Tata steel will also invest between Rs. 12,000 to 15,000 crore to set up a 6 Mtpy steel plant Duburi in Orissa. The company has also planned on developing the Rs.2,000 crore Dhurma Part project which will be built along with Larsen and Toubro and other partners. The company will also lay a railway line to connect it to the Paradip port.



(iii) RINL’s Vizag Steel Plant has decided to take its present rated capacity of 3.5 Mtpy of liquid steel to 5 Mtpy by 2007-08 in its phase I expansion plan at a cost of Rs. 2,500 crore mainly through internal accruals and process upgradations.



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