Hajime SATO Institute of Developing Economies

1. A preliminary survey on the development of the Indian steel industry after the economic liberalisation Hajime SATO Institute of Developing Economies

2. Overview • Crude Steel Production in India in 2004 was 32.6 million tonnes, the ninth largest in the world. • The steel industry in the total manufacturing; • 10% in the value added (fluctuating) • 8% in the employment but decreasing to 6% after 1991

3. Features of the Indian steel Industry • Abundant supplies of raw materials • Integrated plants located inland • Development designated to public sector up to 1991 • Highly regulated and protected markets till 1991 • Relatively slow technological up gradation

4. Brief history • Before 1945, iron making developed, steel making weak • After independence, strong state initiatives and controls (IPA) • IDRA (industrial licenses for entry, expansions etc.) • Succeeded in installing integrated plants(Bhilai, Rourkela, Durgapur) in the early 1960s. The three expanded and Bokaro and VSP added in 70s and 80s. But after all, stagnated from the mid-1960s to 1990.

5. Policy Changes • Industrial and Trade Policy Resolutions in 1991 with regard to the Steel industry • Exempted from industrial license system • Abolition of price controls • Liberalising conditions for FDIs • Liberalisation of imports and exports • Lowering tariff level • In short, steel companies compete more freely in domestic and international markets than before

6. Changes in Technology • Steel making process • Iron making ：　Rise of DRI(HBI/sponge iron) production • Steel making：　Replacement of OHF with BOF/EAF, Introduction of CC • Rolling：　Introduction of flat making capacity(hot strip mill, cold rolling lines) • Labour Productivity：　increasing

7. Structural Changes • Public v. Private：　Newentry of private firms • Integrated v. non-integrated: New types of integrated makers, EAF-Rolling makers, Iron makers, Small EIF makers • Dual structure efficient? Integrated and big EAF makers v. Small EAF and EIF makers

8. Consumption and Trade • Apparent consumption per head extremely low • Relative increase of flat products consumption domestically • Imports stable up to 2003, hot rolled coils decreasing while hot rolled sheets increasing • Exports increasing, not least hot rolled coils • Exporters：The share of SAIL, RINL and TISCO decreasing, new comers exporting.

9. Changes after the economic liberalisation Steel production and export increased much faster than before This increase attributable to new comers Technology catching up rapidly New type of steel firms appeared Flat products imported and exported Problems faced Raw materials Infrastructure Labour Environment Finance Conclusion

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