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Home / IAS Preparation / Forging Industrial Growth

Forging Industrial Growth: Exploring Iron and Steel Industry in India!

Last Updated on Jul 18, 2024
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The Iron and Steel Industry in India has a long history dating back to the 3rd century BC. Initially, India was famous for wrought iron technology using primitive methods of production in nature. However, the Iron and Steel Industry in India saw greater advances after the arrival of the British and industrialization.

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History

Iron and steel production in India began as early as 300 BC. During this time, India produced considerable wrought iron using traditional methods such as the peculiar wedge-shaped furnace called 'Kupya'. The iron produced was of medium carbon content. This iron could be easily forged and was thus suitable for making tools, weapons and nails.

  • The Iron Pillar of Delhi, made around 400 AD, is a fine example of iron produced in ancient India. The wrought iron technology was further developed during the medieval period. Crusher-worked wrought iron, obtained using trip hammers and large water-powered forging hammers, became common.
  • During British rule, India witnessed tremendous changes in the Iron and Steel Industry in India. The first modern blast furnace was set up in Amherst Street, Calcutta 1804. However, production costs were high, and the iron produced was poor quality.
  • The first successful production using a blast furnace and puddling process was reported in 1879 at Star Works iron foundry in Bengal. In the late 19th century, there was rapid growth in the Iron and Steel Industry in India with the establishment of the Bengal Iron Works and other large plants.
  • The Tata Iron and Steel Company Limited (TISCO), today known as Tata Steel, was incorporated in 1907 as the first integrated steel plant in India. The company started producing steel in 1911. This marked the beginning of a modern integrated Iron and Steel Industry in India.
  • The early 20th century saw many developments in the Iron and Steel Industry in India. Large steel plants were set up to meet the growing demand for steel products. Some prominent names were the Indian Iron and Steel Company and Mysore Iron and Steel Works.
  • However, production costs remained high compared to imports. Also, most of the steel produced was in the mild steel category. More specialized steel products had to be imported for defence and industrial needs.
  • After Independence, the need for self-reliance in the Iron and Steel Industry in India became more pronounced. The government took an active role in developing the sector.
  • Several large public sector enterprises were set up with the assistance of the former Soviet Union and other countries, such as Bokaro, Bhilai, Raurkela and Durgapur. They helped India become self-sufficient in steel by the late 1980s.
  • The Iron and Steel Industry in India saw further reforms and liberalization in the early 1990s. This allowed the entry of private sector companies like Essar Steel, Ispat Industries and JSW Steel.
  • Today, India is one of the largest steel producers in the world. The industry employs thousands of people and has strong linkages to other sectors like mining, machinery and infrastructure.
  • Innovation and modern technology have enabled Indian steel companies to produce specialized steel grades. Steel production is also becoming increasingly environment-friendly and energy efficient.

Fig: Distribution Of Iron And Steel Industry In India

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Features And Growth Of Iron And Steel Industry In India

The Iron and Steel Industry in India is very important for the country's economy. It has some special characteristics that make it unique. Here are the main features of the Iron and Steel Industry in India.

  • The Iron and Steel Industry in India is one of the biggest in the world. India makes a lot of crude steel and sponge iron. The industry meets about 95% of India's steel needs.
  • The industry also provides jobs to many people in India. Around 250 big plants and thousands of small units employ about 2.5 million people directly and indirectly.
  • In the early years after Independence, public sector companies like SAIL and RINL dominated the Iron and Steel Industry in India. Even today, these public sector units make up about 35% of the total steel in India.
  • Gradually, private firms like Tata Steel, JSW Steel and Essar Steel have come up. But overall, the industry is still led by the public sector due to its huge capacities.
  • India has a lot of iron ore and coal, the main raw materials for the iron and steel industry. Around 10% of the world's iron ore reserves are in India. India also has the fifth largest coal reserves in the world.
  • The availability of cheap raw materials is a big advantage for the Iron and Steel Industry in India. But issues related to mining, transport and regulations create challenges.
  • Despite making a lot of steel, India's Iron and Steel Industry depends greatly on imports, especially for high-grade varieties. India imports about 30% of its total steel to meet requirements for special varieties.
  • The import of steel has gone up fast in recent years due to growing demand, less indigenous supply and lack of technology. This dependence on imports creates challenges and risks.
  • The Iron and Steel Industry in India has high logistics costs due to factors like poor transport infrastructure, high transport rates and long distances between plants and supplier markets.
  • Estimates show that logistics costs make up about 13 to 15% of the production cost for steel companies. This high cost affects the competitiveness and profits of the industry in a bad way.
  • Generally, the Indian steel industry still uses old technology and processes compared to global standards. Indian plants have much lower energy efficiency and productivity levels.
  • Most large plants were set up decades ago and have not undergone major technological upgrades. This has led to higher costs and lower-quality products.
  • The Iron and Steel Industry in India faces big challenges in complying with environmental norms and regulations. Steel plants emit a lot of dust, gases and heat that harm the environment. They also use a lot of water.
  • The industry also has a poor record of providing a safe work environment for employees. Strict enforcement of regulations and investing in cleaner technologies could help address these challenges.
  • In summary, the Iron and Steel Industry in India is important for the economy with large capabilities. But factors like high import dependence, outdated technology, logistics problems and environmental issues create obstacles to its growth and efficiency. Overcoming these challenges through reforms and modernization can improve the competitiveness of the industry.

Major Iron And Steel Industry In India

Let us look at the major iron and steel industries in India in the given table.

Company Name

Headquarters

Steel Authority of India (SAIL)

New Delhi, Delhi

Tata Steel

Mumbai, Maharashtra

JSW Steel

Mumbai, Maharashtra

Essar Steel

Mumbai, Maharashtra

Jindal Steel & Power (JSPL)

New Delhi, Delhi

Rashtriya Ispat Nigam Ltd. (RINL)

Visakhapatnam, Andhra Pradesh

Bhushan Steel

New Delhi, Delhi

Bhushan Power & Steel

New Delhi, Delhi

VISA Steel

Kolkata, West Bengal

Monnet Ispat & Energy Ltd.

New Delhi, Delhi

Challenges

The Iron and Steel Industry in India faces many difficulties that stop its growth. Here are some key challenges:

  • The Iron and Steel Industry in India has high costs for making steel. This is because of old technology, low productivity, high logistics expenses and other reasons. Indian steel mills spend more money per tonne of steel produced than global standards. Estimates show that production costs in India are 30% to 50% higher than in international markets. This makes Indian steel less competitive in India and abroad.
  • Though India makes a lot of steel, the Iron and Steel Industry in India depends a lot on imports, especially for special kinds of steel not made locally. India imports around 30% of its total steel needs every year. This high import reliance creates risks for the Indian economy. It also shows a gap between steel demand and supply in the country.
  • Bad infrastructure, especially for transport and logistics, creates difficulties for the industry. Steel plants face problems like insufficient road and rail networks, high freight costs, traffic jams and delays. These infrastructure bottlenecks increase overall costs for steel companies.
  • The Iron and Steel Industry in India is one of the most polluting industries. Indian steel plants break many environmental standards. They release large amounts of dust and gases, use large quantities of water and generate wastewater causing pollution. Enforcing stricter environmental regulations and encouraging cleaner technologies has been hard.
  • Most plants in the industry work with old technologies and processes. Indian steel mills use techniques that became outdated in developed economies long ago. Their energy efficiency, productivity and product quality levels are much lower than global best practices. This also results in higher costs and environmental impact.
  • The industry employs over 2.5 million workers but faces many labour issues. Labour unions are often very strong and sometimes violent, affecting plant work. There are also concerns about worker safety, welfare and pay. Accidents and deaths are not uncommon in Indian steel plants.
  • The smooth functioning of the industry depends on enough availability of raw materials like iron ore and coal. However, issues like depletion of reserves, delays in mining permissions, transport bottlenecks and regulatory hurdles have led to shortages of raw materials, especially iron ore, in recent times. This has forced steel companies to import more iron ore at higher costs.
  • In general, Indian steel companies lack strong branding and marketing abilities to enter new markets and compete globally. Most Indian steel producers have focused only on increasing production. 

Conclusion

The limited marketing networks and inability to cater to different customer needs, especially in export markets, have restricted their growth outside India.

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Iron And Steel Industry In India FAQs

The iron and steel industry in India has a long history dating back to the 3rd century BC. However, it saw greater advances after the arrival of the British and industrialization in the nineteenth century. The Tata Iron and Steel Company set up India's first integrated steel plant in 1907.

The industry is characterized by large production and employment, domination by the public sector, availability of raw materials, high import dependence, outdated technology, and environmental and safety challenges.

The key challenges are high production costs, high import reliance, poor infrastructure, environmental issues, outdated technology, labour issues, and shortage of raw materials.

India is currently the second largest producer of crude steel in the world after China. However, the per capita consumption of steel in India is comparatively lower.

The future prospects depend on factors like rising demand for steel from various sectors, untapped reserves of raw materials, prospects of global outsourcing, government policies, and technological advancement.
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