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Steel Industry

Introduction:

Steel plays a vital role in accelerating growth and development of a nation. It is used as a basic material in the manufacture of metal products, electrical machinery, transport equipment, textile, etc and thus considered to be the backbone of the human civilization. It is a product of large and technologically advanced industry having strong forward and backward linkages in terms of material flow and income generation. In other words, the production and per capita consumption of steel is a major contributor to a country’s gross domestic product (GDP) and an indicator of its industrial and economic strength. Iron ore, manganese ore and chrome ore are the critical raw material inputs for the steel industry. Their timely and assured availability in adequate quantity and quality, on long term basis, is a prerequisite for the rapid and orderly growth of the sector.

India is the eighth largest crude steel producing country in the world. It is endowed with richest iron and coal ore mines.

1 Background

2

The establishment of Tata Iron and Steel Company (TISCO) in 1907 was the starting point of modern Indian steel industry. Afterwards a few more steel companies were established namely Mysore Iron and Steel Company, (later renamed Vivesvaraya Iron & Steel Ltd) in 1923; Steel Corporation of Bengal (later renamed Martin Burn Ltd and Indian Iron & Steel Ltd) in 1923; and Steel Corporation of Bengal (later renamed Martin Burn Ltd and Indian Iron and Steel Co) in 1939.[1] All these companies were in the private sector.

Key Events

1907*: Tata Iron and Steel Company set up.

1913: Production of steel begins in India.

1918: The Indian Iron & Steel Co. set up by Burn & Co. to compete with Tata Iron and Steel Co.

1923*: Mysore Iron and Steel Company set up

1939*: Steel Corporation of Bengal set up

1948: A new Industrial Policy Statement states that new ventures in the iron and steel industry are to be undertaken only by the central government.

1954: Hindustan Steel is created to oversee the Rourkela plant.

1959: Hindustan Steel is responsible for two more plants in Bhilai and Durgapur.

1964: Bokaro Steel Ltd. is created.

1973: The Steel Authority of India Ltd. (SAIL) is created as a holding company to oversee most of India's iron and steel production.

1989: SAIL acquired Vivesvata Iron and Steel Ltd.

1993: India sets plans in motion to partially privatize SAIL.

At the time of independence, India had a small Iron and Steel industry with production of about a million tonnes (mt). In due course, the government was mainly focusing on developing basic steel industry, where crude steel constituted a major part of the total steel production. Many public sector units were established and thus public sector had a dominant share in the steel production till early 1990s. Mostly private players were in downstream production, which was mainly producing finished steel using crude steel products. Capacity ceiling measures were introduced. Basically, the steel industry was developing under a controlled regime, which established more public sector steel companies in various segments.

Till early 1990s, when economic liberalization reforms were introduced, the steel industry continued to be under controlled regime, which largely constituted regulations such as large plant capacities were reserved only for public sector under capacity control measures; price regulation; for additional capacity creation producers had to take license from the government; foreign investment was restricted; and there were restrictions on imports as well as exports.

Undoubtedly there has been significant government bias towards public sector undertakings. But not all government action has been beneficial for the public sector companies....
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