In this essay we will discuss about the Iron and Steel Industry. After reading this essay you will learn about: 1. Subject Matter of Iron and Steel Industry 2. Development of Iron and Steel Industry in India 3. Problems 4. Suggestions 5. Liberalisation of Steel Policy.

Contents:

  1. Essay on the Subject Matter Iron and Steel Industry
  2. Essay on the Development Iron and Steel Industry in India
  3. Essay on the Problems Iron and Steel Industry
  4. Essay on the Suggestions for Solving the Problems Iron and Steel Industry
  5. Essay on the Liberalisation of Steel Policy

Essay # 1. Subject Matter of Iron and Steel Industry:

Iron and steel industry is the “key” of “basic” industry of India. Rapid industrialisation of the country requires rapid development of iron and steel industries.

The development of agriculture, consumer goods industry, transport and communication facilities, machine and tools making industry, electrical machinery producing industry etc. are all to depend on the development and expansion of iron and steel industries of the country.

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The real beginning of large scale production of iron and steel through modernized method was made since 1907 when the Tata Iron and Steel Company (TISCO) was established at Jamshedpur. Although two more small iron and steel industries were established in India in the Private sector before the establishment of TISCO but these industries could not stand competition from foreign producers.

Essay # 2. Development of Iron and Steel Industry in India:

Just before independence, total production capacity of iron and steel industry in India was only 1.3 million tonnes-1 million tonnes of TISCO and 0.3 million tonnes from Indian Iron and Steel Co. (IISCO). After independence various steps were taken under the economic planning, to develop public sector steel plants in India.

The new industrial policy, 1956 placed the iron and steel industries in schedule A where only public sector units can be established, keeping the chances open for the expansion of existing iron and steel industries in the private sector.

Accordingly, the decision to establish first public sector plant was taken in 1954 for establishing Rourkela Steel Plant. In 1955 another agreement was signed between India and U.S.S.R. to establish the second public sector plant at Bhilai. Then in 1956, another agreement was signed with British consortium for establishing their public sector plant at Durgapur.

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Thus, with the development of three public sector units in subsequent years the total production of crude steel ingots has gradually increased from 1.47 million tonnes in 1950-51 to 6.14 million tonnes in 1970-71 and then to 64.9 million tonnes in 2009-10.

Total production of finished steel also rose from 1.04 million tonnes in 1950-51 to 4.64 million tonnes in 1970-71 and then to 14.3 million tonnes in 1991-92 and is expected to be 87.67 million tonnes in 2013-14.

During the first two plans, development of steel industry was quite rapid with the establishment of three public sector plants. During the Third Plan the production capacity of the previous three plants were doubled and a new plant was established at Bokaro.

Later on, since the introduction of Fourth Plan steps was also taken for the development of three more steel plants one each at Salem, Bijoynagar and Visakhapatnam.

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In 1974, the Steel Authority of India Limited (SAIL) was created for the development of steel industry, for supplying major inputs to the industry and also to bring a coordinated and synchronized development of all the major industrial units under its control.

These major units were: Hindustan Steel Limited, Salem Steel Limited, Hindustan Steel Works Construction Limited, Bharat Coking Coal Limited and National Mineral Development Corporation Limited.

The management of TISCO is also undertaken by SAIL. The SAIL is at present an integrated steel company with five public sector steel plants. At present about 70 per cent of domestic steel requirement is only met by SAIL. With commissioning of the Vishakhapatnam Steel Plant by 1994-95, the project would raise the production capacity by another 2.17 million tonnes.

The steel industry is providing direct employment to about 2.5 lakh workers. The Seventh Plan fixed the target to increase the production capacity in saleable steel to 15 MT and also to raise the volume of total production to 13 million tonnes. At the end of the plan, the target was fulfilled.

In-spite of that, India is still deficient in respect of production of steel. Thus, a large gap between the consumption and production of steel still persists. To meet such gap India is importing steel to the extent of 1 to 1.5 million tonnes leading to a huge bearing on foreign exchange reserves. In 1989-90 and 1999-2000, India imported steel worth Rs 2,300 crore and Rs 4,371 crore respectively.

Essay # 3. Problems of Iron and Steel Industry:

The iron and steel industry of the country is having various problems of its own.

These problems are:

(a) Inadequate supply of power and coal,

(b) Inefficiency of public sector units,

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(c) Under- utilisation of capacity,

(d) Inadequacy of finance,

(e) Inadequacy of technically trained personnel,

(f) Sickness of mini steel plants,

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(g) Problem of administered prices of steel,

(h) Increasing demand of iron and steel,

(i) Dependence on foreign investment,

(J) Problem of transportation for carrying raw materials,

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(k) Industrial disputes,

(l) Excess staff,

(m) Demand-supply gap,

(n) Increasing global competition, and

(o) Escalation of cost of its inputs.

Essay # 4. Suggestions for Solving the Problems of Iron and Steel Industry:

Considering the different problems faced by the iron and steel industry, there is an urgent need to go for major change in the steel sector.

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Accordingly, the Planning Commission observed, “If steel industry is to be maintained in the interest of industrial and economic development of the country, then basic problems like tension in labour relation, low productivity of labour, lack of coal, electricity, experts, equipment’s etc. which hinder the development of the industry, will have to be tackled. To make the optimum use of production capacity of the steel plants, labour, management, government and concerned institutions will have to think over.”

Suggestions which are important for the development of steel industry include:

(a) Improvement and upgradation of technologies,

(b) Arrangement for the supply of best quality coal,

(c) Full utilisation of its capacity,

(d) Diversification of production,

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(e) Adoption of efficient management of public sector steel units,

(f) solution of labour disputes,

(g) Arrangement for proper training of workers,

(h) Development of small factories and

(i) Attaining stability in the increasing prices of the steel.

In order to face these problems, the iron and steel industry needed a comprehensive planning for modernisation, upgradation of technologies, replacement of obsolete equipment and removal of technological imbalances.

Essay # 5. Liberalisation of Steel Policy:

In recent years the government has liberalised the steel policy in order to meet the projected demand supply gap during the Eighth Plan and Ninth Plan and also to encourage export of steel and steel based products. This process of liberalisation was started since 1982. In 1986, private sector units were allowed to produce steel by using EAF.

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Expansion of units with a ceiling capacity of 2.5 lakh tonnes was permitted in February, 1988.

On June 6, 1990, the government issued a set of new guidelines in order to rationalise and liberalise the manufacture of steel and steel-based products, to remove unwanted restrictions and also to raise the minimum economic scale of production. Accordingly, private sector investment was allowed to set up steel plants with its maximum capacity up to 1 million tonnes per annum with some important conditions.

On January 16, 1992, the government took a historic decision to abolish price and distribution controls on iron and steel products manufactured by integrated steel plants. Since then the freight equalisation scheme was also completely withdrawn, only partial control over distribution was retained for safeguarding the interest of priority sector.

But prospects of iron and steel industry in India are very bright. Thus, if all these steps are implemented in proper times and spirit then India will soon be converted into an iron and steel exporting country from its present status of iron and steel importing country.

In the meantime, consequent to the removal of price and distribution control on iron and steel on 16th January, 1992, the integrated steel plants increased their prices by an average of 15 per cent on 18/19 May, 1992 in order to offset the increase in input costs. After some increase in market prices following the price revision by integrated steel plants, the prices of various items of steel have stabilized throughout the country.

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The import of all items of steel is now freely allowed. Import duty on steel melting scraps, billet and HR coils was also reduced. This will have a moderating effect on market price. Production of saleable steel in April-November 1996 has gone up by 10.3 per cent over the corresponding period of 1995.

Production of furnished steel has increased by 14.3 per cent and that of saleable pig iron by the main plants, by 14.7 per cent. Production of finished steel is expected to rise at 21.4 million tonnes in 1995-96 as against 17.8 million tonnes in 1994-95.

All these reflect the beginning of a recovery in capital goods industries. Moreover, it also demonstrates that the Indian iron and steel industry has stood up to the more liberalised import regime. If things move in the right direction then the Indian iron and steel will revive its glamour and strength and be able to attain competitiveness for the export of steel in near future.

In recent years, the condition of steel industry in India has been improving gradually, as reflected in the annual report of the Steel Ministry (1994). Total production of saleable steel in 1997-98 has been estimated at about 19.20 million tonnes compared to 18.51 million tonnes in 1996-97 showing an increase of 3.67 per cent over the previous year.

The commissioning of new capacities at TISCO, and modernisation programmes at Durgapur, Rourkela and Bokaro Steel Plants of SAIL and new units of ESSAR (Gujarat) and others will substantially add to the availability of flat steel products in the country.

The annual report further observes that the exports of steel have taken a quantum jump crossing 2 million tonnes in 1992-94 from a mere 3.1 lakh tonnes in 1991-92, marking a height in international competitiveness.

Encouraged by the performance despite global recession in 1992-93, plans have been chalked out to achieve exports of over 5 million tonnes by the end of the Ninth Plan.

The early impact shows that the liberalisation has brought about a qualitative change in the Indian iron and steel sector. With de-licensing and decontrol of the steel industry and reduction of import duties on iron and steel items, producers have become more responsive to consumer needs. There is also increasing awareness of the need to improve quality and cut down costs.