ZENITH International Journal of Multidisciplinary Research Vol.

2 Issue 1, January 2012, ISSN 2231 5780

www.zenithresearch.org.in

177

THE INDIAN STEEL SECTOR: DEVELOPMENT AND POTENTIAL

DR. SURESH VADDE*; G. SRINIVAS** *Associate Professor, Department of Accounting & Finance, College of Business Management & Economics Mekelle University, Melelle, Ethiopia. **Assistant Professor, Department Business Management, V.R. College of Management Warangal (A.P) India. ABSTRACT The Indian steel industry has made a rapid progress on strong fundamentals over the recent few years. The industry is getting all essential ingredients required for dynamic growth. The government is backing the industry through favorable industrial reforms, while the private sector is supporting it with investments worth billions of dollars. Even in the tough times of economic slowdown, the industry succeeded to sustain its positive growth momentum on the strong fundamentals of domestic demand from construction, automobile and infrastructure sectors. With an impressive track record, the country has become a reputed name in the world steel industry. Global steel giants from all over the world have shown interest in the industry because of its phenomenal performance. For instance - the crude steel production in India registered a moderate year-on-year growth of 2.7% in 2009 and reached 56.6 Million Metric Tons. On the other side, some Asian countries such as Japan and South Korea saw significant decline in their production levels. This further signifies the resilience and strength of the Indian steel industry against external risk factors. This paper presents the global scenario of steel industry as well as Production, consumption and growth of steel industry in India. In the second part; the author has made an attempt to highlight the Trends in production of Crude Steel in private/public sector in India. In the final facet of this paper; the author concludes with the challenges and opportunities of Indian steel industry. KEYWORDS: Steel Industry, Domestic Demand, Crude Steel Production, Post-liberalization. ______________________________________________________________________________ INTRODUCTION Steel is crucial to the development of any modern economy and is considered to be the backbone of human civilization. The level of per capita consumption of steel is treated as an important index of the level of socioeconomic development and living standards of the people in any country. It is a product of a large and technologically complex industry having strong forward and backward linkages in terms of material flows and income generation. All major industrial economies are characterized by the existence of a strong steel industry and the growth of many of these economies has been largely shaped by the strength of their steel industries in their initial stages of development. Steel industry was in the vanguard in the liberalization of the industrial Sector and has made rapid strides since then. The new Greenfield plants represent the latest in technology. Output has increased, the industry has moved up in the value ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 1, January 2012, ISSN 2231 5780 www.zenithresearch.org.in

178

chain and exports have raised consequent to a greater integration with the global economy. The new plants have also brought about a greater regional dispersion easing the domestic supply position notably in the western region. At the same time, the domestic steel industry faces new challenges. Some of these relate to the trade barriers in developed markets and certain structural problems of the domestic industry notably due to the high cost of commissioning of new projects. The domestic demand too has not improved to significant levels. The litmus test of the steel industry will be to surmount these difficulties and remain globally competitive. OBJECTIVES OF THE PRESENT STUDY The following objectives have been framed by keeping in view of the relevance of the study in the present situation. To present the global scenario of steel industry as well as the production, consumption and growth of steel industry in India. To study the trends in production of Crude Steel in private and public sector in India. To highlights the challenges and opportunities of Indian steel industry. SOURCE OF THE STUDY The study is based on the data collected from secondary source which is gathered from the Annual Reports of different steel sectors, published materials in the form of books, articles from journals, websites and reports are relevant to the study. The study of steel industry in India covers a period of 05-years, commencing from 31st March, 2005 to 2011. HISTORY OF IRON AND STEEL INDUSTRY IN INDIA: Iron and steel industry in the country has experienced a sustainable growth since the independence of the country. A humble beginning of the modern steel industry was reached in India at Kulti in West Bengal in the year 1870. But the outset of bigger production became noticeable with the establishment of a steel plant in Jamshedpur in Bihar in 1907. It started production in 1912. The new township was named after Jamshedji Tata. This venture was followed by Burnpur and Bhadrawati Steel plants in 1919 and 1923 respectively. It was, however, only after Independence that the steel industry was able to find a strong foothold in the country. Excluding the Jamshedpur plant of the Tatas, all are in the public sector and looked after by Steel Authority of India Ltd. (SAIL). Bhilai and Bokaro Steel plant were set up with Soviet alliance. Durgapur and Rourkela came up with British and West German technical expertise, respectively. The finished steel production in India has grown from a mere 1.1 million tonnes in 1951 to 23.372 million tonnes in 1997-98. During the first two decades of planned economic development, i.e. 1950-60 and 1960-70 the average annual growth rate of steel production exceeded 8%. However, this growth rate could not be maintained in the decades to follow. During 1970-80, the growth rate in steel production came down to 5.7% per annum and picked
ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 1, January 2012, ISSN 2231 5780

www.zenithresearch.org.in up marginally to 6.4% per annum during 198090.Though India started steel production in 1911, steel exports from India began only in 1964. Exports in the first five years were mainly due to recession in the domestic iron and steel market. Once domestic demand revived, exports declined. India once again started exporting steel only in

179
Country Production (million tonne)

1975 touching a figure of 1 million tonne of pig iron export and 1.4 million tonnes of steel export in 1976-77. Thereafter, exports again fell rapidly to meet rising domestic demand. Only after liberalisation of the steel sector the exports of iron and steel have once again started increasing. Though the country's production of iron and steel is sufficient to meet the domestic demand, however, some quantity of steel is always needed to be imported especially those grades and qualities which are required in small quantities, and therefore do not justify setting up of production capacities. STEEL INDUSTRY: GLOBAL SCENARIO The current global steel industry is in its best position in comparing to last decades. The price has been rising continuously. The demand expectations for steel products are rapidly growing for coming years. The shares of steel industries are also in a high pace. The steel industry is enjoying its 6th consecutive years of growth in supply and demand. And there is many more merger and acquisitions which overall buoyed the industry and showed some good results. The supreme crisis has lead to the recession in economy of different countries, which may lead to have a negative effect on whole steel industry in

coming years. However steel production and consumption will be supported by continuous economic growth. TABLE-01: WORLD CRUDE STEEL PRODUCTION IN 2010 Rank 1 2 3 4 5 6 7 8 9 10

China Japan USA Russia India South Korea Germany Ukraine Brazil Turkey

626.56 109.60 80.59 67.00 66.80 58.45 43.82 33.56 32.82 29.00