Indian Steel Industry

By: EconomyWatch   Date: 30 June 2010

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Indian Steel Industry is going gaga in the world steel market because of the demand for steel generated around the world especially by the developing countries. There are mainly four industry types which are generating the domestic demand for Indian Steel Industry :-

 

  • Infrastructure industry (both private and government projects)
  • Construction Industry
  • Automobile Industry
  • Real Estate Industry

In terms of quantity of production, the Indian Steel Industry has a world ranking of seven. The first steel industry was established in the year 1953 in Rourkela in Orissa with a production capacity of one million tonnes per annum.

The organization structure of Indian Steel Industry can be categorized in the following manner :-

  • Main Producer of steel
  • Other major producers of steel
  • Secondary Producer

The first two categories have an integrated system of steel production with a productive capacity of more than 0.5 metric ton. Some of the main players included in this category are TATA Steel, SAIL, etc.

The third category, namely, Secondary Producer, include :-

  • Producers of sponge iron
  • Furnaces meant for induction
  • Furnaces meant for energy optimization
  • Electric Arc Furnace
  • Mini Blast Furnace
  • Re-rolling Firms

Indian Steel Industry has some advantages that give it the extra sought after mileage over its peers from other countries which can be summed up as follows :-

  • The wage rate of the laborers working in the steel industries are low
  • The base for production of steel is a matured one
  • The automobile industry in India, one of the main demander of steel, has a steep upward moving slope.
  • The construction as well as the infrastructure industry, big demander of steel, are also on an upward slope due to the government policy regarding emphasis on developmental works.
  • The workforce associated with the Indian Steel Industry are highly knowledgeable and experienced

The most significant news regarding Indian Steel Industry is TATA Steel's acquisition of the Corus group after going through a strenuous bidding. Ultimately, TATA Steel was able to buy Corus at eight billion US dollars which makes the deal to be fixed at 455 pence per share which are needed to be paid in cash by the TATA Steel to the shareholders of Corus. This deal is a highly expensive one and comes only after the Mittal-Arcelor deal of thirty eight billion US Dollars. The finalization of TATA-Corus deal has catapulted TATA Steel from 65th position to 5th position in terms of productive capacity. This has not only strengthened the Indian Steel Industry's position in the Asian market but also on the productive capacity of the whole world. Some of the relevant and striking facts about Indian Steel Industry are :-

  • Capital base of Indian Steel Industry revolves around a whooping ninety thousand crore rupees.
  • The contribution of this industry to GNP of India is almost six percent.
  • The weightage assigned to Indian Steel Industry in the Industrial Production is 5.13.

According to the 11th Five Year Plan (2007-2008 to 2011-2012), some of the projections related to Indian Steel Industry are mentioned below :-

  • Domestic Supply of steel would reach a whooping target of seventy seven million tonnes which is approximately 66 % higher from 2007-08.
  • Domestic demand for steel would touch a milestone of seventy million tonnes which is approximately 4 % higher from 2007-08.

It has been noticed as well as observed that the correlation between the growth of Indian Steel Industry and the economy is very high. As the Indian economy is regularly reaching new highs, so the steel industry is also expected to reach new production levels. Speculation and research works are on a record high regarding the Indian Steel Industry. A metal consultancy firm based in UK has projected that the domestic production of crude steel in 2020 would reach the hundred million tonnes mark.


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