7

CHAPTER-II
OVERVIEW OF IRON AND STEEL INDUSTRY
1. INTRODUCTION
Steel is crucial to the development of any modern economy and is considered to
be the backbone of the human civilisation. The level of per capita consumption of steel
is treated as one of the important indicators of socio-economic development and living
standard 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 flow
and income generation. All major industrial economies are characterised 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.
2. HISTORICAL PERSPECTIVE
The finished steel production in India has grown from a mere 1.1 million tonnes in
1951 to 36.957 million tonnes in 2003-04. 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 that followed. During 1970-80, the growth rate in steel production came
down to 5.7% per annum and picked up marginally to 6.4% per annum during 1980-90.
The production during the last decade has doubled.
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. Upon revival of the domestic demand there was a decline in exports.
India once again started exporting steel only in 1975 touching a figure of 1 million
tonnes
of pig iron export and 1.40 million tonnes of steel export in 1976-77. Thereafter, exports
again fell rapidly to meet rising domestic demand. It was only after liberalisation of the
steel sector that the exports of iron and steel have once again started increasing. During
2002-03 India exported 4.506 million tonnes of finished steel recording a growth of
66.6%. This trend has continued with exports of finished carbon steel being 4.835
million tonnes during 2003-04. The total volume of Finished (Carbon) Steel exported
during the current year (April-October 2004) is provisionally estimated at 2.1 MT which
is
lower by 19.2% exported during the corresponding period of last year.
Though the country's production of iron and steel is sufficient to meet the
domestic demand, 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. During 2002-2003, India imported 1.51 million
8
tonnes of finished steel recording a growth of 18.8%. During 2003-04 the imports of
steel have been estimated to be around 1.65 million tonnes. The total volume of
Finished (Carbon) Steel) imported during the current year (April-October 2004) is
provisionally estimated at 1.05 MT which is higher by 7.7% imported during the
corresponding period of last year.
The progress of the steel industry has a critical influence on the pace of India's
development and as such great importance is attached to capacity expansion in line
with
expected demand at cost and prices which make Indian steel internationally
competitive.
The existing regime of liberalization, decontrol and deregulation of industry in the
country
has opened up new opportunities for the expansion of the steel industry. With a view to
accelerating the growth of the steel sector and attaining the vision of India becoming a
developed economy by 2020, the Ministry of Steel is actively engaged in the exercise
for
formulation of a National Steel Policy.
3. LIBERALISATION OF THE INDIAN STEEL SECTOR
The important policy measures, which have been taken for the growth and
development of the Indian iron and steel sector are as under:
􀂾 In the new industrial policy announced in July, 1991, iron and steel industry
among others, was removed from the list of industries reserved for the public
sector and also exempted from the provisions of compulsory licensing under the
Industries (Development and Regulation) Act, 1951.
􀂾 With effect from 24.5.92, iron and steel industry was included in the list of ‘high
priority’ industries for automatic approval for foreign equity investment upto 51%.
This limit has since been increased to 100%.
􀂾 Pricing and distribution of steel were deregulated from January, 1992. At the
same time, it was ensured that priority continued to be accorded for meeting
the requirements of small scale industries, exporters of engineering goods
and North Eastern Region, besides strategic sectors such as Defence and
Railways.
􀂾 The import regime for iron and steel has undergone major liberalisation moving
gradually from a controlled import by way of import licensing, foreign exchange
release, canalisation and high import tariffs to total freeing of iron and steel
imports from licensing, canalisation and lowering of import duty levels. Export
of iron and steel items has also been freely allowed.
􀂾 Import duty on capital goods was reduced from 55% to 25%. Duties on raw
materials for steel production were reduced. These measures reduced the capital
costs and production costs of steel plants.
9
􀂾 Freight equalisation scheme was withdrawn in January 1992. However, with
the coming up of new steel plants in different parts of the country, iron and steel
materials are freely available in the domestic market.
Levy on account of Steel Development Fund was discontinued from April, 1994
thereby providing greater flexibility to main producers to respond to market
forces.
4. STEEL INDUSTRY : CURRENT GLOBAL SCENARIO
Globally steel output trends remained on a firm upward path. The rising demand
has primarily been fueled by the increased demand from China. The favourable trends
in the international markets promise to continue for some more time as the US and
some
of the leading European economies are showing early signs of recovery. In May 2004
ten new nations joined the European Union (EU), making it the world’s largest trading
block. For the global steel industry, this is an important development since the new
member countries are expected to add about 15% to the enlarged EU’s total crude steel
output. The per capita consumption level is low in most of the new member countries,
leaving much room for growth. Steel demand in EU therefore has likelihood of recording
growth in the days to come and may very well spruce up global steel demand in a world
reliant on China to show the way.
World crude steel production for the 62 countries reporting to the International
Iron and Steel Institute stands at 763.0 million tonnes for the first nine months of 2004
(i.e. Jan to Sept). This is 8.7% higher than the corresponding period of 2003. The world
production of crude steel in 2003 was 965 million metric tonnes, which was almost 7%
higher than that of the previous year. China continued to remain the largest consumer
(262.48 million metric tonnes) as well as the largest producer (220.1 million tmetric
tonnes) of crude steel. India was the 8th largest producer of crude steel in 2003 with a
production of 31.8 million metric tonnes.
Among other significant developments in the global scenario was the
commencement of Market Access negotiations on Non-agricultural Products in the
World
Trade Organisation (WTO) following the mandate given by the Fourth WTO Ministerial
Conference held in Doha in November, 2001. The aim of the negotiations was to reduce
or eliminate tariffs in particular on products of export interest to developing countries.
All steel items are bound at 40% level. Ministry of Steel has suggested that while
arriving at new bound rates through application of a formula, the high price elasticity of
import in case of steel should be kept in view and maximum possible value of the
coefficient,
to be adopted, should be taken. The Ministry also suggested that in order to
implement the Doha mandate of ‘less than full reciprocity’ for the developing countries in
letter and spirit, it would be best if a separate formula could be proposed for the
developing countries.
In the meeting of the General Council of WTO held in Geneva during July 27-29,
2004, Members agreed that special and differential treatment for developing Members
would be an integral part of all elements in the negotiations. They also agreed that tariff
10
reductions be made through a tiered formula that would take into account the different
tariff structures of the developed and developing countries.
The deliberations, being held under the aegis of OECD, for a proposed Steel
Subsidy Agreement (SSA) to strengthen disciplines in world steel trade, continued and
the last meeting of the OECD High Level Group on Steel was held in June 2004. The
main objective of the meeting was to take stock of the ongoing SSA negotiations and to
provide guidance for future work. The participants agreed that more time was needed to
explore ways to resolve their differences on various provisions of the SSA.
5. TRADE ACTION AGAINST INDIAN EXPORTS BY OTHER COUNTRIES
The WTO Secretariat has reported a significant decline in anti-dumping
measures in the period 1st January – 30th June, 2004. There has been no noteworthy
trade action against Indian export of steel items this year. However, some of the
trade actions that continue against Indian steel export are as follows:-
Brazil: In April 2003, the Department of Commercial Defence (DECOM)
of Brazil initiated anti-subsidy investigation against Inox Steel Bars originating from
India. A fact-finding team of the Brazilian Finance ministry visited India in February,
2004. Further progress is yet to be made available to the Department of Commerce
by the Indian Mission/Brazilian authorities.
Canada: The Canadian International Trade Tribunal (CITT) initiated
safeguard investigation against imports of certain steel goods in March, 2002. While
giving its findings in August, 2002, the Tribunal took into account Canada’s
obligations under international trade agreements which require that imports from
developing countries be excluded from safeguard remedies, if certain are met.
Accordingly, the Tribunal has recommended those imports from countries considered
to be developing countries by the Development Assistance Committee of the
Organisation for Economic Co-operation and Development, that meet these criteria
be excluded from any safeguard remedy.
China: In May 2002 China initiated safeguard investigation against 11
categories of steel products and imposed provisional safeguard measures on 9
categories and 17 sub-categories. India, being a developing country, was exempted
from the provisional safeguard measures except in the category of non-alloy steel
plates. In November, 2002 China imposed definitive safeguard measures against
import of steel products by fixing tariff quotas for different items. India, however, has
been exempted from the safeguard measures.
European Union (EU): In June, 2002 the EU announced provisional
Safeguard Measures against 21 categories of steel products. Stainless Steel Wires
and Electrical Sheets (non-grain oriented) were two items of concern to India.
However, in the final Safeguard Measures announced in September, 2002, these two
categories were exempted as a result of further investigations.
11
Indonesia: In September, 1997 Indonesia imposed anti-dumping duty
against imports of Hot Rolled Coils and Plates from various countries including India.
In February, 2003 the Ministry of Industry and Trade of the Republic of Indonesia
institute Sunset Review had recommended termination of the anti-dumping measures
on HR Coil and Plates from India.
South Korea: In July, 2003 the Korean Trade Commission initiated antidumping
investigation against imports of Stainless Steel bars originating from India.
The investigation is going on.
Thailand: The Department of Foreign Trade (DFT) of Thailand initiated
anti-dumping investigations against imports of HR Coils from India in July, 2002 and
imposed preliminary anti-dumping duty on Indian exports. In July, 2003, the DFT,
however, issued a notification fixing a ‘reduced quota and waived the anti-dumping
duty for the next five years.
USA: Government of India approached the Dispute Settlement Body of WTO
against the decision of US-DOC to impose heavy ADD and CVD on import of Cut to
Length Plates (CTL) from SAIL. The Panel set up by the Dispute Settlement Body of
WTO concluded that the United States had acted inconsistently with Article 6.8 and
paragraph 3 of Annex II of the AD Agreement in refusing to take into account US
sales price information submitted by SAIL without a legally sufficient justification and
making its determination regarding the dumping margin for SAIL entirely on the basis
of ‘facts available’. However, the Panel did not agree with India’s claim targeting the
relevant US statutory provision governing the use of facts available.
On 7th February, 2003 the US issued a notice of determination under Section
129 of the Uruguay Round Agreement Act purporting to implement the ruling and
recommendations of the DSB in this dispute. Under the revised determination the
anti-dumping duty has been reduced to 42.39%.
In February, 2003, the US Department of Commerce initiated anti-dumping
and anti-subsidy investigation against Indian Prestressed Concrete Steel Wire
Strands. US Department of Commerce announced the final duties in December,
2003, imposed an AD Margin of 102.07% against TATA SSL, 83.65% against other
Indian exporters and Countervailing Duty of 62.92% ad valorem against all the Indian
steel exporters.
6. ANTI DUMPING ACTION BY INDIA
The Government of India has set up the “Directorate General of Anti-Dumping
and Allied Duties” in the Ministry of Commerce headed by the Designated Authority,
to aid and protect the domestic steel industry against the trade actions targeted at
Indian steel exports by the advanced/developed nations of the world. The
Directorate while staying within the framework of WTO has been making rigorous
efforts to legally fight such trade barriers.
12
The last notable decision by DGAD pertaining to the steel sector was the
termination of the Anti-dumping investigation in August, 2003 against import of Hot
Rolled Coils, Sheets, Plates and Strips originating in or exported from South Africa,
Romania, Venezuela, European Union, Australia, Canada, Singapore etc. The
DGAD terminated the investigations on the grounds that the petitioners were not able
to provide sufficient evidence of injury to the domestic industry from the imports of the
subject goods in terms of the requirement stipulated under the Anti Dumping Rules.
In May, 2004, the Designated Authority has initiated mid-term review of the
anti-dumping duty imposed on imports of certain seamless grade of alloy and nonalloy
steel billets, bars and rounds from Russia, China and Ukraine.
7. GROWTH OF THE INDIAN STEEL SECTOR AFTER LIBERALISATION
7.1 FINISHED CARBON STEEL
The Indian steel sector was the first core sector to be completely freed from the
licensing regime and pricing and distribution controls. This was done primarily because
of the inherent strengths and capabilities demonstrated by the Indian iron and steel
industry. The economic reforms and the consequent liberalization of the iron and steel
sector which started in the early 1990s resulted in substantial growth in the steel
industry
and greenfield steel plants were set up in the private sector. Today, India is the eighth
largest steel producing country in the world. This sector represents around Rs. 90,000
crores of capital and directly provides employment to over 5 lakh people. The growth
rate of finished steel production was 4.7% in 2001-02. The production of finished steel
during the year, 2002-2003 was 33.67 million tonnes. The annual growth rate of finished
steel production in India during 2002-2003 was 9.9%. The production of finished steel
during 2003-2004 was 36.957 million tonnes. The annual growth rate of finished steel
production in India during 2003-2004 was 9.7%. The Finished (Carbon) Steel production
during the current year (April-October 2004) at 21.681 MT (Prov) was up by 3.5% over
the corresponding period of the pervious year.
The total production of finished steel and the share of main and secondary
producers from the year, 2000-2001 onwards is given in the table below. The main
producers are SAIL, RINL and TISCO who have the largest integrated steel plants in
the
country. The remaining producers such as Essar Steel, Ispat Industries and Jindal
Group, are clubbed together under the category of secondary producers.
Table – II:1
(In million tonnes)
YEAR MAIN PRODUCERS SECONDARY
PRODUCERS
TOTAL
2000-2001 12.49 (42.7%) 16.78 (57.3%) 29.27
2001-2002 13.05 (42.6%) 17.58 (57.4%) 30.63
2002-2003 14.38 (42.7%) 19.28 (57.3%) 33.67
2003-2004 15.19 (42.0%) 21.77 (58.0%) 36.96
2004-2005 (Prov.) ( Apr-Oct,04) 08.78 (39.9%) 12.90 (60.1%) 21.68
(Source: JPC) (Figures in brackets indicate the percentage share of Main/Secondary
producers in the total production)
13
7.2 PIG IRON
7.2.1 Along with the production of steel, the production of pig iron in the country during
the period, 1998-99 to the present year has also increased. There has been a decline in
the production during 2003-2004 and April-September, 2004. The details are as under :-
Table – II : 2
(In million tonnes)
YEAR MAIN PRODUCERS SECONDARY
PRODUCERS
TOTAL
1998-1999 1.354 1.644 2.998
1999-2000 1.226 1.955 3.181
2000-2001 0.964 2.434 3.398
2001-2002 1.016 3.055 4.071
2002-2003 1.107 4.178* 5.285
2003-2004 0.966 2.798 3.764
2004-2005 (Prov.) 0.163 1.150 1.313
* Includes hot metal for steel making
7.3 SPONGE IRON
7.3.1 During the early 90s, sponge iron industry had been specially promoted so
as to provide an alternative to steel melting scrap, which was increasingly becoming
scarce.
The productions of sponge iron (Direct Reduced Iron - DRI) during the period
1992-93 to the present year are as under:-
Table - II : 3
(In million tonnes)
YEAR PRODUCTION % INCREASE
1992-93 1.44 9.0
1993-94 2.40 66.7
1994-95 3.39 41.3
1995-96 4.40 29.8
1996-97 5.01 13.8
1997-98 5.35 6.8
1998-99 5.11 - 4.50
1999-2000 5.18 1.40
2000-2001 5.44 5.0
2001-2002 5.66 4.0
2002-2003 6.91 22.1
2003-2004 8.09 17.1
2004-2005
(Prov.) Apr-Sept’04
4.63 19.6
14
7.3.2 As per the IISI, India has emerged as the largest producer of sponge iron in the
world since 2003. The production of sponge iron in the country has also resulted in
providing an alternative feed material to steel melting scrap which was hitherto imported
in large quantities by the Electric Arc Furnace Units and the induction Furnace Units.
This has resulted in considerable saving in foreign exchange.
8. APPARENT CONSUMPTION OF STEEL
The long term projection of steel demand which formed the basis of capacity
planning during Second and Third Five Year Plans, were based on an optimistic rise in
per capita consumption of steel and high absorption of steel in the economy. This
optimism was based on the growth rates of different sectors, structural changes in the
economy and import substitution. The apparent consumption of Finished (Carbon)
Steel which was only 18.66 million tonnes in 1994-95. This increased to 27.43 million
tonnes in 2001-2002 28.89 million tonnes in 2002-2003 and is estimated to be 31.169
million tonnes in 2003-04, showing an increase of 7.88% over the previous year. The
consumption of finished steel during the current year (April-October, 2004) rose to 6.1%
from the level of the corresponding period last year to reach 18.931 million tonnes.
Apparent consumption of steel is arrived at by subtracting export of steel from the
total domestic production and import of steel in the country. Change in stock is also
adjusted in arriving at the consumption figures. It is also treated as the actual domestic
demand of steel in the country. The year-wise apparent consumption of finished steel
since 2000-2001 is given in the table below:-
Table – II: 4
(In million tonnes)
YEAR APPARENT CONSUMPTION
2000-2001 26.52 (6.71%)
2001-2002 27.43 (2.73%)
2002-2003 28.89 (5.32%)
2003-2004 31.169 (7.88%)
2004-2005 (Prov)
( April-October, 04)
18.931(6.1%)
(Source: JPC)
(The figures in brackets indicate the percentage increase over the
previous year/period)
9. LONG TERM DEMAND PROJECTIONS OF FINISHED STEEL
As per the report of the Committee on Steel and Ferro-Alloys as a part of 10 th
Five Year Plan Working Group on Mineral Exploration and Development (other than
coal and lignite) demand for finished carbon steel has been projected at 38.224 million
tonnes and 52.015 million tonnes during 2006-07 to 2011-12 respectively.
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10. BRIEF SURVEY OF STEEL SECTOR
10.1 THE PROPOSED TARGETS FOR PRODUCTION OF STEEL DURING 10TH
FIVE YEAR PLAN OF INTEGRATED STEEL PLANTS
The targets proposed originally for all the integrated steel plants of Steel Authority
of India Limited (SAIL) and Rashtriya Ispat Nigam Ltd. (RINL) for the 10 th Five Year Plan
are exhibited in the Table 11.5 below :-
Table –II : 5
10th
Plan
Period
Hot Metal Crude Steel Saleable Steel Pig Iron
SAIL RINL SAIL RINL SAIL RINL SAIL RINL
2002-03 13108 3600 11850 3100 10813 2772 670 450
2003-04 13365 3700 12155 3200 10930 2867 715 436
2004-05 13388 3750 12072 3200 10747 2867 808 481
2005-06 13488 3800 12072 3200 10747 2867 901 526
2006-07 13488 3800 12072 3200 10747 2867 901 526
Total 66837 18650 60221 15900 53984 14240 3995 2419
11. PRODUCTION PLAN 2003-2004
11.1 The production plan and actual production for 2003-04 in respect of SAIL, RINL
and TISCO are indicated in Table-II-6 below:
Table-II : 6
UNIT ’000 T
ITEM/PLANT
CAPACITY TARGET
PRODUCTION
ACTUAL
PRODUCTION#
HOT METAL
BSP 4080 4300 4932
DSP 2088 1975 1982
RSP 2000 1785 1727
BSL 4585 4220 4108
VISL 216 180 173
IISCO 810 810 641
Total SAIL 13779 13270 13563
RINL 3400 3850 4055
TISCO
CRUDE STEEL
16
BSP 3925 4150 4743
DSP 1802 1785 1759
RSP 1900 1642 1572
BSL 4360 3820 3754
ASP 234 123 141
VISL 95 108 115
IISCO 423 423 301
Total SAIL 12739 12052 12384
RINL 3000 3235 3506
TISCO
SALEABLE STEEL
BSP 3153 3600 4091
DSP 1586 1650 1612
RSP 1671 1650 1575
BSL 3780 3400 3450
ASP 184 100 113
SSP 175 90 85
VISL* 77 90 100
IISCO 352 352 257
Total SAIL 10978 10932 11283
RINL 2656 2900 3169
TISCO
PIG IRON
BSP 45 120
DSP 45 51
RSP 5 17
BSL 150 89
VISL 51 31
IISCO 335 223
Total SAIL 631 532
RINL 556 539 439
# Actual production is rounded.
* Capacity of Saleable steel at VISL represents alloy and special steel only and is
exclusive of mild steel. This also does not include production of CC bloom for direct
sales.
IISCO’s capacity is taken to be same as production plan, consequent on shutting
down of some of its uneconomical units on a permanent basis and ageing of the plant.
17
SAIL plants – 2003-2004 Performance :-
SAIL seized the opportunity offered by a buoyant market to further raise its
volume of production, improve product-mix and operational efficiency to achieve best
ever performance.
Saleable Steel production exceeded 11.0 MT for the first time, with capacity
utilization of 104%. Production of hot metal and crude steel was also highest ever with a
growth of 6% in hot metal and 7% in crude steel over 2002-2003. This was achieved by
maximising asset utilisation with better input and infrastructure management.
Concast production in 2003-2004 was best ever at 7.25 MT, with a growth of 11%
and CC ratio in crude steel went up from 59% last year to 61%. Concast production
operated at 120% capacity during 2003-2004.
The production-mix was further improved as per market demand. Plate
production went up by 20% with Plate mill at Bhilai Steel Plant operating above capacity
for the first time. Rails 90-UTS production went up by 4% to 0.715 MT. Production of
CRNO electrical steel went up by 10% Pipes by 51% and GP/GC by 4%.
There has been further improvement in techno economic parameters. Some of
the achievements during 2003-2004 as compared to last year are as follows:-
• Lowest ever energy consumption of 7.46 Gcal/tcs, which is 1% lower than last
year.
• Highest ever BF productivity of 1.53 T/m3/day, improvement of 1% over 2002-
2003.
• Specific power consumption declined by 3% over previous year to lowest ever
486 kwh/tss.
Performance of RINL – 2003-2004
The production targets set for the year 2003-2004 by the company much above
the rated capacities were also surpassed registering a growth compared to the previous
year by 3% in Hot Metal production, 5% in Liquid Steel, 2% in Light & Medium Merchant
Mill (LMMM) production, 6% in Wire Rod production, 9% in Medium Merchant Structural
Mill (MMSM) production and 4% in Saleable Steel production.
MOU targets were fulfilled by more than 100% in case of Hot Metal, Liquid Steel
and Saleable Steel. The performance against MOU targets is at 101% in Over Pushing,
105% in Hot Metal production, 108% in Liquid Steel, 113% in Light & Medium Merchant
Mill (LMMM) production as well as in Wire Rod production, 120% in Medium Merchant
Structural Mill (MMSM) production and 109% in Saleable Steel production.
The efficiency in Specific Energy Consumption improved by about 1%, which
stood at 6.07 G.Cal/tls for the year 2003-2004, compared to 6.13 G.Cal/tls in 2002-
2003.
Gross water consumption stood at 3.31 Cum/tls during 2003-2004 as compared to 3.96
18
Cum/tls of previous year. Gross Power consumption stood at 481 Kwh/tls during 2003-
2004 as compared to 478 Kwh/tls of previous year.
12. PRODUCTION PLAN 2004-2005
12.1 The production plan during 2004-05 in respect of SAIL, RINL and TISCO is
indicated below :-
Table II : 7
UNIT ’000 T
ITEM/PLANT
CAPACITY TARGET
PRODUCTION
ANTICIPATED
PRODUCTION#
HOT METAL
BSP 4080 4550 4700
DSP 2088 2000 2050
RSP 2000 1740 1650
BSL 4585 4300 4250
VISL 216 150 160
IISCO 850 850 750
Total SAIL 13819 13590 13560
RINL 3400 3950
TISCO
CRUDE STEEL
BSP 3925 4400 4550
DSP 1802 1850 1850
RSP 1900 1597 1550
BSL 4360 3920 3850
ASP 234 115 138
VISL 118 120 115
IISCO 520 520 445
Total SAIL 12859 12522 12498
RINL 3000 3300
TISCO
SALEABLE STEEL
BSP 3153 3750 3850
DSP 1586 1700 1650
RSP 1671 1650 1600
BSL 3780 3500 3500
ASP 184 120 120
SSP 175 95 95
VISL 98 95 100
19
IISCO 426 426 370
Total SAIL 11073 11336 11285
RINL 2656 2958
TISCO
PIG IRON
BSP 36 100
DSP 18 40
RSP 4 4
BSL 160 160
VISL 8 26
IISCO 254 195
Total SAIL 480 525
RINL 556 570
IISCO’s capacity is taken to be same as production plan consequent on shutting
down of some of its uneconomical units on a permanent basis and ageing of the plant.
12.2 2004-05 PERFORMANCE (APRIL-SEPTEMBER 2004) – SAIL and RINL
12.2.1 SAIL
SAIL plants produced 5.02 MT of saleable steel during April-September, 2004
which is 99% of the MOU plan.
Saleable Steel
Plan Actual % Ful.
April-September, 2004-2005 5050 5020 99
Production was affected during 1st quarter of 2004 due to lower availability of
coking coal. The production picked up during 2 nd quarter, 2004 with improvement in
availability of coking coal.
The operational efficiency in the four main SAIL plants was enhanced in the
following areas :-
• Concast production went up to 3.5 MT during April-September, 2004 and has
shown a growth of 2% over corresponding period last year.
• Finished steel production went up to 4.16 MT during April-September, 2004 and
registering a growth of 1% over corresponding period last year as given below:-
April-September
2004-05 2003-04
% Growth
over April-
Sept’ 2003
CC Production 3545 3464 2
Finished Steel 4167 4112 1
20
TECHNO-ECONOMICS :
Some of the improvements in techno-economic parameters during April-
September 2004 over corresponding period last year are as follows:-
• Coke rate of 539 kg/thm during April-September 2004 is 1% lower than
corresponding period last year.
• Specific energy consumption at 7.46 Gcal/tcs during April-September 2004 is
0.3% lower than corresponding period last year.
12.2.2 RINL
(‘000 Tonnes)
Item Plan Production Performance
Hot Metal 1995 1821
Crude Steel (Liquid Steel) 1656 1737
Saleable Steel 1438 1543
Pig Iron 298 57
13. PRODUCTION PLAN 2005-2006
13.1 The detailed plans for 2005-2006 is yet to be worked out in SAIL. Therefore,
provisional production plan based on an optimistic scenario is given below which may
undergo changes in line with market and operating conditions.
Table - II : 8
UNIT ‘ 000 T
ITEM/PLAN TARGET
Capacity Production
HOT METAL
BSP 4080 4800
DSP 2088 2100
RSP 2000 1750
BSL 4585 4200
VISL 216 160
IISCO 850 850
TOTAL SAIL 13819 13860
RINL 3400 4000
TISCO
CRUDE STEEL
BSP 3925 4550
DSP 1802 1850
RSP 1900 1650
BSL 4360 3900
ASP 234 150
VISL 118 115
21
IISCO 556 556
TOTAL SAIL 12895 12771
RINL 3000 3400
TISCO
SALEABLE STEEL
BSP 3153 3900
DSP 1586 1700
RSP 1671 1600
BSL 3780 3600
ASP 184 120
SSP 175 100
VISL 98 100
IISCO 458 458
TOTAL SAIL 11105 11578
RINL 2656 3044
TISCO
PIG IRON
BSP 100
DSP 15
RSP 2
BSL 95
VISL 26
IISCO 211
TOTAL SAIL 449
RINL 556 525
14. DISTRIBUTION OF IRON AND STEEL
As a part of the economic liberalisation process, the Government of India, on 16 th
January, 1992, abolished the price regulation of the Joint Plant Committee (JPC) on iron
and steel which had been in existence since 1964. However, the requirements of
Defence, Railways, Small Scale Industries Sector, Exporters of Engineering Goods and
the North Eastern Region continue to be met on priority at prices that are announced by
the producers from time to time.
Government has a scheme for routing the allocation of Iron and Steel materials
from main producers like SAIL, RINL and TISCO to SSI units, and other Government
department (up to 30% of the total allocation) through the State Small Scale
Industries Corporations (SSICs). In order to ensure that small scale industries obtain
these raw materials at reasonable prices, the Govt. gives an average subsidy of Rs.
500/- per tonne (as handling charges) to the Corporations so that the corporations
supply the steel material at the doorstep of the SSI units. As SSI Co-ordination
Committee with the representative from Ministry of Small Scale Industry (SSI),
Associations and Main producers has been set up to review the functioning of this
scheme. Coordination Committee in its meeting held during April 2004 recommended
to allocate additional steel items for supply to SSI units through National Small
Industries Corporation (NSIC). The NSIC was to distribute steel items to the states
where SSICs were non-extant or defunct.
22
Allocation of Iron & Steel items made during the last three years is as follows:-
(Quantity in ‘000 MTs)
Corporations 2002-03 2003-04 2004-05
SSICs 435 540 (24.1%) 861(59.4%)
NSIC - - 428
Total 435 540 (24.1%) 1289 (139.7%)
(Figures in brackets indicate % change over previous year)
In order to monitor lifting performance and proper distribution to the SSI units,
quarterly review meetings are held in this Ministry wherein main producers are also
invited. From time to time, inspections are also carried out by the Regional Offices of
the Joint Plant Committee to oversee the functioning of the scheme.
15. PRICING OF IRON & STEEL
The pricing mechanism of the Joint Plant Committee (JPC) operating from 1964
was abolished with effect from 16th January, 1992. Producers are now free to
determine and announce their prices, which are now governed by market forces of
demand and supply.
After deregulation, the main producers i.e. Steel Authority of India Limited
(SAIL), Rashtriya Ispat Nigam Limited (RINL) and Tata Iron & Steel Company (TISCO)
are charging either the actual freight upto stockyard or freight element as it existed
prior to deregulation whichever is lower. This has ensured that far flung areas and
distant states are protected.
16. IMPORT AND EXPORT OF IRON AND STEEL – POLICY FRAME WORK
The general policy and procedures for export and import of iron and steel,
ferro alloys and ferro scrap are decided by the Ministry of Commerce in consultation
with the Ministry of Steel.
With the liberalisation of India’s trade policy and commencement of the five
year import-export policy, our policy for import and export of iron and steel has
undergone sweeping changes. Import of all items of iron and steel is now freely
allowed.
The value-based advance licence and the old pass-book scheme have been
replaced by a new scheme – Duty Entitlement Pass Book (DEPB) scheme – which
combines the positive features of both the schemes besides being easy to administer
and being more transparent. Under this scheme, exporters on the basis of notified
entitlement rates, are granted due credits, which would entitle them to import goods
duty free. The DEPB Scheme was temporarily suspended against all steel export
w.e.f. 28.02.2004. The suspension was subsequently revoked w.e.f. 12.7.2004.
23
DGFT has revised the DEPB rates in October, 2004 and they have been substantially
reduced on steel items. Value cap for all items of iron & steel and ferro alloys has
also been fixed.
The most important move in the new Exim Policy is the reduction of
transaction time to exporters by introducing a new eight-digit commodity classification
in line with imports. Under the Advance Licence scheme, the new policy abolishes
Duty Exemption Entitlement Certificate (DEEC), which was in practice since 1975.
The policy also withdraws Advance License for annual requirement and exporters
can now avail of Advance Licenses of any value.
Exports of all items of iron and steel are now freely allowed. Exports of high
grade iron ore, chrome ore and manganese ore are made through designated
canalising agencies, subject to the ceilings imposed by the Government in order to
conserve high grade ores for domestic consumption and production of value added
materials.
The Government remains focused on reforms in international trade area and
has initiated several measures to boost exports (in general) through various policy
instruments. Export procedures are also being streamlined to facilitate exporters.
This is in line with the target set in the current Exim Policy to attain a 1% share in
world export trade by 2007 which translates to about a 12% annual rate of growth in
exports.
In the latest amendment made by DGFT in the Exim Policy (2002-2007) the
steel items listed at Sl. No. 77 to 109 DGFT Public Notice No. 44 dated 20.11.2000
have been deleted thereby removing the requirement of mandatory BIS Certification
for import of these items. The withdrawal of steel items from the purview of
Notification No. 44 has removed a major hurdle in imports of iron & steel items.
17. IMPORT OF IRON & STEEL
India had been annually importing about 1.0 to 1.5 million tonnes of steel.
Imports are mostly on price considerations and, in some cases, to supplement domestic
production. The observed growth in imports is mainly in hot rolled coils, cold rolled coils,
semis and steel scrap. Increased emphasis on import substitution has emerged as a
key trend in the domestic industry. The total imports of salable steel, pig iron and scrap
during the last five years and value thereof are as under :-
24
Table II: 9
(Quantity – ‘000 tonnes; Value – Rs. in crores)
2000-01 2001-02 2002-03 2003-04 2004-05 (Prov)
(April-July 04)
Category
Qty Value Qty Value Qty Value Qty Value Qty Value
Saleable
Steel
1885 2712 1501 2260 1666 2697 1676 3255 699 1653
Pig Iron 2.00 2.03 2.00 2.36 1.00 1.48 2.6 3.14 1.3 2.09
Steel Scrap 1512 945 1980 1206 1280 967 1497 1470 547 685
(Source: JPC)
18. EXPORT OF IRON AND STEEL
India has already registered its presence in the global market in the recent years.
While India started steel production in the year, 1911, steel exports from India started
only in 1964. However, steel exports have been sporadic. From 1964 to 1968 India
exported a large quantity of steel mainly due to recession in the domestic iron and steel
market. Subsequently, exports declined with revival of the domestic demand. India once
again started exporting steel from 1975, touching a record export of steel in 1976-77
when India exported 1 million tonnes of pig iron and 1.4 million tonnes of steel.
Thereafter, exports again declined only to pick up in 1991-92, when Main Producers
exported 3.87 lakh tonnes valued at Rs. 283 crores. Export of finished carbon steel in
2003-04 is 4.835 million tonnes, which is higher by 7.30% during the corresponding
period of last year. Total exports of the iron and steel sectors during 2003-2004 has
been estimated to be 6.037 million tonnes.
Due to various policy measures taken up by the Government like liberalisation of
import-export policy, introduction of flexibility in the advance licensing scheme and
convertibility of rupee on the capital account, exports of iron and steel from India have
received continued thrust.
The quantity and value of steel, pig iron and sponge iron exported from the year
2000-01 is as given in the following table:
Table II: 10
(Quantity - lakh tonnes; Value - Rs. crores)
YEAR Saleable Steel Pig Iron Sponge Iron Total Iron & Steel
Qty Value Qty Value Qty Value Qty Value
2000-2001 23.36 3973* 2.32 N.A. NIL - 25.68 4672*
2001-2002 21.29 3718* 3.12 N.A. NIL - 24.41 4263*
2002-2003 49.66 8783 6.29 377 NIL - 55.95 9160
2003-2004 55.19 NA 5.18 NA NIL NIL 60.37 NA
2004-2005
(Prov)
(April-Oct. 04)
19.84 NA 3.38 NA NIL NIL 19.84 NA
*Source :DGCI&S
25
Value addition in the Indian export basket has been a major trend. Earlier,
exports consisted mainly of plates, structurals, bars and rods, whereas now, apart from
semis, hot rolled coils, cold rolled coils, colour coated sheets and GP/GC sheets, are
also being exported. Sponge iron exports, however, have been nil for the last few years.
Of late, exports of cold rolled and particularly, galvanized products, has been significant.
Indian exporters have also shifted attention to emerging markets where selling
steel had been profitable given the assured market access (absence of protectionist
barriers). China has emerged as the most important export destination for Indian steel in
recent times.
19. WINDING UP OF DEVELOPMENT COMMISSIONER FOR IRON AND STEEL
ORGANISATION
Consequent upon the acceptance of the recommendations of the Expenditure
Reforms Commission, an administrative decision was taken to close down the DCI&S
Office, Kolkata along with its four regional offices located at Chennai, Mumbai, Kolkata
and New Delhi w.e.f. 23.5.2003. All the residual work except the collection of data from
secondary sector was transferred to the newly created DCI&S Cell in the Ministry of
Steel. The DCI&S Cell is handling the following tasks.
(a) Matters relating to allocation of Iron & Steel items to SSI units through Small
Scale Industries Corporation (SSICs)/National Small Industries Corporation (NSIC).
Iron & Steel items are allocated to the State Small Scale Industries Corporation
(SSICs) for distribution to SSI units. In order to improve the distribution, a JPC rebate of
about Rs. 500 per tonne is also provided to the SSICs. From the 2 nd quarter of 2004-
2005, allocations were also made in favour of the NSIC for meeting the requirement of
SSI units in states where the SSICs are defunct or non-existent. The allocation of Iron
& Steel items, during the last three years, for distribution to SSI units is also follows:-
(Quantity in ‘000 MTs)
Corporations 2002-2003 2003-2004 2004-2005
SSICs 435 540 861
NSIC - - 428
Total 435 540 1289
(b) Matters relating to Administration/Establishment of DCI&S Office.
Closure of the DCI&S Office led to considerable agitation amongst the staff
posted at its office in Kolkata. However, due process was followed in terms of detailed
instructions issued by the Division for Retraining and Redeployment of the Department
of Personnel & Training (DOPT) for declaring the staff as surplus and subsequent
redeployment. As per the DOPT guidelines all surplus employees continue to draw
their salaries till such time they get redeployed to other posts or demit office as a result
of their superannuation , resignation or special voluntary retirement. The total existing
26
strength of the organization at the time of closure of DCI&S Organisation was 226. Out
of these:-
• 215 staff of the DCI&S organization have been declared surplus and are
on the Rolls of the DOPT for redeployment etc.
• 10 officials are yet to be declared surplus by the DOPT
• 87 surplus staff of the organization have so far been
nominated/redeployed to various Central Government offices etc. by the
DOPT
• 8 surplus staff have taken voluntary retirement under Special Voluntary
Retirement Scheme of the DOPT
• 11 surplus employees demitted the office due to retirement etc.
20. IMPROVEMENT IN THE OUTLOOK OF IRON AND STEEL SECTOR
Indian steel market is poised for a significant growth of production, exports and
consumption, due expansion of domestic manufacturing, construction and other allied
activities in the economy. After witnessing a prolonged downturn the industry has
started consolidating its position for the last two years, mainly with the revival in the
world steel market and the increase in domestic demand from various steel consuming
sectors. In fact, the Indian steel industry is buoyant with several future expansion plans
to meet the expected increased both in the domestic and global markets. The capacity
utilisation is almost 100% for the major producers and several brown-field expansion
plans are in the pipeline. Considerable interest in green-field projects is also evident
from domestic majors and foreign steel companies. All these augur well for the growth
of the Indian steel industry, though there are several infra-structural and raw material
constraints faced by the industry. Availability of good quality coking coal and iron ore
are some of the problems faced by the industry and the government is examining
several policy prescriptions to address these problems. For example, the government is
encouraging private captive ownership of iron ore and coal mines, investment overseas
in coal mining, augmentation of mining capacity through fresh investment and
development of necessary transport infrastructure around the mines.
21. ACTION BEING TAKEN BY MINISTRY OF STEEL
The Ministry of Steel has been making efforts to address concerns of the
domestic steel industry. Some of the important steps taken are as follows :-
(a) Boosting demand in the steel consuming sectors
Several measures have been initiated to boost the domestic demand for steel.
• Government has finalised the draft of National Steel Policy which targets overall
development of the steel sector in a liberalised environment.
• A National Campaign Committee has been constituted to promote steel consumption
through development of markets, promotion of new products, etc. with special
emphasis on penetration of the rural markets.
27
• Setting up of different institutes/organisations to help the industry in improving the
technology status, sector-specific achievements for increase of consumption,
development of skilled manpower along with down stream facilities all over the
country to help in increasing steel consumption.
• Greater stress on R&D with special emphasis being given on innovative applications
of steel to boost demand and cost cutting measures to remain globally competitive.
• Organisation of seminars, workshops and interactive sessions for the purpose of
dissemination of knowledge thereby minimizing the gap between consumers and
producers.
(b) Duty on project imports
Ministry of Steel has been advocating increased expenditure on infrastructure as
well as improvement in the infrastructural facilities for the steel sector. The Union
Budget 2004-2005 announced the establishment of a National Manufacturing
and Competitive Council to energize the manufacturing sectors. Huge
infrastructure investment plans have also been proposed in the Budget. These
measures will have a positive impact on the domestic steel sector since
increased investment will boost domestic demand for steel and better
infrastructure especially the port and other transportation facilities will cut down
transaction cost for the domestic steel industry and enhance its competitive
edge.
(c) Reduction Power & Rail Tariffs
The Ministry of Steel has been interacting with State Governments to provide
power at reduced/concessional tariff especially to mini-steel plants all over the
country. The railway freight charged by the Indian Railways is comparatively
higher than the tariff charged by the domestic railways in other countries. The
higher freight rate has prompted many customers to shift to movement of steel by
road. Railway Budget 2004-2005 has not proposed any increase in the freight
rates and this would mean that the steel industry will not face any rise in cost on
account of transportation of finished goods as well as inputs.
(d) Reduction in input costs
The Ministry of Steel has also been able to rationalise the classification of coking
coal in consultation with the Coal Ministry so as to reduce the impact of royalty
payable on this basic raw material. Import duty on several raw materials by the
steel industry like non-coking coal, metcoke and nickel has been reduced to 5%.
Import duty on coking coal has been reduced to zero. In the Union Budget 2004-
2005 import duty on raw materials for refractories and graphite electrodes have
also been reduced.
28
(e) Future Prospects
With the liberalisation and globalisation of Indian economy, the steel industry has
to gear-up, not only to domestic competition, but also to global competition in
terms of product range, quality and rice. The growth of the steel sector is
intricately linked with the growth of the Indian economy and especially the growth
of the steel consuming sectors. India has become self-sufficient in iron and steel
materials in the last 3-4 years. Exports have been rising. Production and
production capacities are increasing. The position needs to be further
consolidated and issues affecting production and consumption need to be
resolved on a continued basis. At the same time, productivity of our steel plants
must be maintained at levels close to international standards. The Ministry of
Steel continues to play a proactive role in helping the steel industry to overcome
bottlenecks in the growth of this sector.
22. IRON ORE
22.3 Production and Despatches
Production of Iron Ore (including concentrates) during the year 2004-2005 is
estimated at 140.2 million tonnes as against 120.6 million tonnes in the previous year.
State-wise production figures indicate that Karnataka would continue to be the leading
producing State accounting for 38.2 million tonnes (27.2%) of the total production during
2004-2005 followed by Orissa with 37.8 million tonnes (26.9%), Chhattisgarh with 24.83
million tonnes (17.2%), Goa with 20.3 million tonnes (14.5%) and Jharkhand with 16.0
million tonnes (11.4%). The remaining about 2% of total production would be from
Andhra Pradesh, Madhya Pradesh, Maharashtra, and Rajashtan. Despatches of Iron
Ore (including concentrates) for 2004-2005 are estimated at 136.2 million tonnes. The
despatches of iron ore for internal consumption and exports would be 79.6 million
tonnes
and 56.6 million tonnes respectively.
Production and despatches of Iron Ore from 1997-98 to 2004-2005 are given
below :-
Table – II : 11
(Rs. in crore)
Year/Period Production Despatches
Qty. (MT) Value
Total (MT) For Internal
Consumption (MT)
For Exports
(MT)
1997-98 75.7 1819.70 74.2 40.5 33.7
1998-99 72.2 1855.95 69.4 38.9 30.5
1999-00 74.9 1923.66 71.5 41.0 30.5
2000-01 80.6 2117.95 79.9 46.4 33.5
2001-02 86.2 2496.92 87.6 49.8 37.8
2002-03 99.1 2964.86 102.6 56.6 46.0
2003-04 (P) 120.6 3698.74 120.4 71.6 48.8
2004.05 (E) 140.2 5379.56 136.2 79.6 56.6
(P) - Provisional
(E) - Estimated (Comprises the recorded figures upto August, 2004 and
estimated for September, 2004 to March, 2005)
29
22.4 Iron Ore Exports
The exports during the year from 1998-99 to 2003-2004 are given below :
Table II: 12
Year Quantity
(in Million Tonnes)
Value
(Rs. in crore)
1998-99 22.3 1615.50
1999-00 15.7 1175.32
2000-01 20.2 1633.80
2001-02 23.1 2033.55
2002-03 57.1 4200.44
2003-04 51.5 5173.62
(Source: DGCI&S, Kolkata)
(P) - Provisional
23. MANGANESE ORE
23.1 Reserves
As per the National Mineral Inventory, the recoverable reserves of manganese
ore, as on 1.4.2000, are placed at 191 million tonnes. The major reserves in the country
are of blast furnace grade. The reserves of ferro-manganese grade are very limited to
about 11% of the total reserves.
23.2 Production
Production of Manganese Ore during 2004-05 is 2.02 million tonnes as compared
to 1.74 million tonnes in the previous year. Orissa, Maharashtra, Madhya Pradesh and
Karnataka are the principal producing states accounting for about 96% of the total
production of Manganese ore in 2004-05.
23.3 Despatches
Estimated despatches of Manganese Ore during 2004-05 were 1.97 million
tonnes of which 1.69 million tonnes were for internal consumption and 0.28 million
tonnes for export.
Production and despatches of Manganese Ore during the year 1998-99 to 2004-05 are
given below :-
Table II: 13
Year/Period Production Despatches (MT)
Quantity
(MT)
Value
(Rs.Crores)
Total
For Internal
Consumption
For Exports
1998-99 1.54 173.83 1.46 1.26 0.20
1999-2000 1.59 193.09 1.62 1.26 0.36
30
2000-2001 1.60 197.75 1.68 1.46 0.22
2001-2002 1.59 203.89 1.44 1.24 0.20
2002-2003 1.66 239.10 1.58 1.46 0.12
2003-2004(P) 1.74 256.35 1.75 1.53 0.22
2004-2005 (E) 2.02 333.28 1.97 1.69 0.28
(P) - Provisional (E) - Estimated MT - Million Tonnes
24. CHROMITE ORE
24.1 Reserves
As per the National Mineral Inventory as on 1.4.2000, the total recoverable
reserves of chromite ore are estimated at over 97 million tonnes of which 97
percent reserves are confined to Orissa state.
24.2 Production
Production of Chromite in 2004-05 is 3.266 MT as against 3.199 MT in 2003-
2004. Orissa continues to be the major producing state accounting for 3.233 MT or
(99%) of the total production during 2004-2005.
24.3 Despatches
Despatches of Chromite during 2004-05 were 2.358 MT of which 1.404 MT
(59.54%) were for internal consumption and 0.954 MT (40.46%) for export.
Production and despatches of Chromite during the year 1998-99 to 2004-05 are given
below :
Table II: 14
Year/Period Production Despatches (MT)
Quantity
(MT)
Value
(Rs.Crores)
Total
For Internal
Consumption
For
Exports
1998-99 1.41 282.34 1.29 0.904 0.385
1999-2000 1.73 346.72 1.57 0.869 0.701
2000-2001 1.97 364.97 1.73 1.062 0.667
2001-2002 1.54 266.04 1.68 0.921 0.761
2002-03 3.06 467.25 2.27 1.083 1.192
2003-2004(P) 3.20 470.93 2.70 1.616 1.081
2004-2005 (E) 3.26 490.03 2.35 1.404 0.954
(P) - Provisional
(E) - Estimated
MT - Million Tonnes
31
25. SPONGE IRON INDUSTRY
25.1 Sponge iron is a metallic product produced through direct reduction of iron and
iron ore pellets in the solid state. It is also known as Direct Reduced Iron (DRI)
or Hot Briquetted Iron (HI). This is a substitute in steel melting scrap used mainly
in electric steel making basic oxygen furnaces. The indigenous availability of
metal scrap is not sufficient to meet the present and emerging need of steel
producers in the country. In order to push up the production of Sponge Iron in
the country and to gainfully utilise natural resources, Government of India is
encouraging the development of this sector. As per the IISI, India emerged as
the largest sponge iron producer in the world since 2002. This sector saves
foreign exchange by substituting the imported steel melting scrap.
25.2 During 2003-2004, 50 units having a total capacity of 8.99 mt have reported a
gross production of 7.29 mt. However, based on information provided by SIMA
and other industry sources, a total 90 number of units having a capacity of 9.98
mt are under operation. The estimated total production in 2003-2004 was 8.085
mt.
During 2004-2005 (April-September’ 2004), 35 units having a total capacity of
8.05 mt have reported a gross production of 3.43 mt. As per available
information, there are 93 sponge iron units in the country having a capacity of
9.19 million tonnes per annum. On the basis of the statewise capacity utilisation
of reporting units, the estimated total production during April-September’ 2004 is
4.63 mt. Out of these, there are 90 coal based units covering a capacity of 4.84
million tonnes per annum and 3 gas based units covering a capacity of 4.50
million tonnes per annum. 3 coal based units covering a capacity of 72 thousand
tonnes per annum are lying closed. The production of the sponge iron in the
country during last three years and current year is as under.
Table II: 15
(In ‘000 tonnes)
2001-02 2002-03 2003-04 2004-05
(Prov.)
Total Reported 5045.0 6001.4 6790.1 3920.0
Total Estimated 613.0 907.0 1295.0 705.0
Grand Total 5658.0 6908.4 8085.1 4625.0
The impediments in the growth of sponge iron industry are non-availability of
non-coking coal of required quantity and quality and inadequate availability of
natural gas for gas based units. This Ministry supports the captive coal mining
by the sponge iron units.
32
26. PIG IRON
26.1 Pig iron is an important industrial raw material used by the foundry industry
engaged in manufacture of various types of castings for the engineering industry.
In the past, pig iron was mainly produced by the main producers viz., integrated
steel plants of Steel Authority of India Limited (SAIL) with very little production by
the lone unit of M/s. Kalinga Iron Works in the private/secondary sector. Later,
Rashtriya Ispat Nigam Limited (VSP) joined the stream of main producers.
Further, Neelachal Ispat Nigam Ltd., Orissa had commissioned the Blast Furnace
in February, 2002 and commenced production and Jindal Steel & Power Ltd.,
Chhattisgarh having commissioned their Blast Furnace in April, 2002
commenced production of Pig Iron. However, there were always shortages of
foundry grade pig iron leading to imports. Post liberalisation, with the setting up
of several units in the private/secondary sector, not only has drastically reduced
imports, but also has turned out India to be a net exporter of pig iron.
26.2 During 2003-2004, total production of pig iron was 37.64 lakh tonnes of which the
contribution by the Private/Secondary Sector units was 27.98 lakh tonnes which
is nearly 74.3% of the total production. While imports during the year were
limited at 0.02 lakh tonnes, exports were 5.18 lakhs tonnes as compared to 6.29
lakh tonnes in the preceding year. Production of pig iron as well as imports and
exports during the last 5 years are given below:-
Table II: 16
Year Production Imports Exports
Main Producers Other Producers Total
1999-2000 12.26 19.55 31.81 0.03 2.90
2000-2001 9.64 24.34 33.98 0.02 2.32
2001-2002 10.16 30.55 40.71 0.02 3.12
2002-2003 11.07 41.78 52.85 0.01 6.29
2003-2004 9.66 27.98 37.64 0.02 5.18
2004-2005 (Prov.)
April-Sept’04
1.63 11.50 13.13 0.01 1.03
26.3 During April-September, 2004 the total production of pig iron has been
provisionally placed at 13.13 lakh tonnes. During this period, contribution of the
Private Sector Units was about 88%. Export have been reported to be 1.03 lakh
tonnes during this period while imports have been reported to be 1000 tonnes
only.
33
27. IMPORT OF SCRAP
As per the present Exim Policy, scrap can be freely imported directly by actual
users or by traders on behalf of actual users. The import of scrap through various
agencies during the last few years is given below:-
(in lakh tonnes)
Year Imports
1998-99 08.80
1999-2000 10.76
2000-2001 15.12
2001-2002 19.80
2002-2003 12.80
2003-2004 (Prov.) 14.97
2004-2005* (Prov.) 05.47
* (April-July, 2004)
Due to the increase in international price of scrap and the shortage in the
domestic market, the customs duty on melting scrap was brought down to Zero from 5%
w.e.f. 20.08.2004. However, in view of the recent incidents wherein steel producers
discovered explosives in the scrap imported/purchased by them DGFT has imposed
certain restrictions on import of steel scrap which inter-alia include the following:-
(a) Import of metallic waste and scrap shall be permitted in shredded and compacted
form only;
(b) However, metallic waste and scrap in unshredded and uncompacted form may
be imported through the major ports (covered by the Major Port Trusts Act, 1963)
and the Inland Container Depot at Tughlakabad, New Delhi only. The customs
authorities shall carry out 100% inspection of such unshredded and
uncompancted materials.
28. PRIVATE SECTOR
In addition to Tata Iron and Steel Company, there are large number of units in
the private sector which are engaged in the production of steel and steel processing
activities like production of non-flat products, wire drawing etc. In terms of existing
policies, no prior permission of the Government is required for setting up steel making
or processing units barring certain restriction on locations. This sector enjoys the
provision of automatic approval of foreign investment upto 100%.
28.1 Private sector is playing an important role in supplementing the requirement of
steel in the country. Their contribution in finished steel production has increased to
58.9% in 2003-2004 as compared to 45% in 1992-93. It is expected that private sector
will continue to play a dominant role in the future.
34
28.2 Electric Arc Furnace units which are popularly known as mini steel plants are
significantly contributing in the production of steel in the country. The overall production
of these units in the country is as under:-
Table II: 17
No. Category 2000-01 2001-02 2002-03 2003-04 2004-05
(Prov.) Apr-
Sept’04
1 Mild Steel 1162.60 965.20 1652.18 3302.35 1237.81
2 Medium/High Carbon Steel 1386.30 1025.40 874.60 909.47 556.80
3 Alloy Steel 740.60 689.20 793.60 622.21 286.70
4 Stainless Steel 740.60 471.50 594.03 666.81 321.17
5 Others 165.80 171.40 313.44 318.47 41.89
6 Total Reported 3910.50 3322.70 4227.87 5819.31 2444.37
7 Total Estimated 924.10 960.00 960.10 170.72 920.73
Grand Total (6+7) 4834.60 4282.70 5187.97 5990.03 3365.10
28.3 At present there are 37 electric arc furnace units operating in the country having
a capacity of 7.855 mt. However, many are reported closed for various reasons such as
rising cost of inputs, high power tariff coupled with poor power quality, uneconomic
production capacities, outdated technology, labour, financial and managerial problems
and slowdown of demand.
28.4 Besides the above EAF units, 3 units in the private sector with a total annual
installed capacity of 2.19 million tonnes have commissioned their plants – the process
route being COREX-BOF & BF-EOF. These three units follow oxygen steel making
process which is autothermic (i.e. energy requirement is provided by the physical heat
of hot metal and chemical heat by reaction of hot metal with oxygen). In two units, hot
metal is sourced from conventional Mini Blast Furnance. Hot metal is sourced in the
third unit from Corex plant which is based on alternate technology utilising non coking
coal and iron ore without pre-treatment with reduced impact on environment.
*****