February , 2019
Growth in steel industry augurs well for ancillaries
12:09 pm

Aritra Mitra

The Indian government has defined an ancillary industry as, “An unit, having capital investment not exceeding Rs. 1 crore, which produce parts, components, sub-assemblies and tooling for supply against known or anticipated demand of one or more large units manufacturing and assembling complete products and which is not a subsidiary to or controlled by any large unit in regard to the negotiation of contracts for supply of its goods to any large unit. This shall not, however, preclude an ancillary unit from entering into an agreement with a large unit giving it the first option to take the former’s output.” The major iron and steel plants of India include Tata Iron and Steel Company (TISCO), Indian Iron and Steel Company (IISCO), The Visweswaraya Iron and Steel Ltd., Bhillai Iron and Steel Centre, Plant of Hindusthan Steel Ltd. at Rourkella and The Hindusthan Steel Ltd. at Durgapur, Bokaro Steel Ltd., Tata Steel Kalinagar, Posco Steel at Paradwip, and others. These plants need high grade haematite iron, coal, manganese, dolomite, limestone and fire clay for production and are highly dependent and related to a wide array of ancillary industries.    

Ancillary industries of iron and steel

The iron and steel industry is one of the most important industries in India. India was the third largest producer of raw steel in the world, from 2014 to 2017. The industry produced 91.46 million tonnes of total finished steel and 9.7 million tonnes of raw iron. Most iron and steel in India is produced from iron ore. The Ministry of Steel is concerned with the coordination and planning of the growth and development of the iron and steel industry in the country. This includes formulation of policies with respect to production, pricing, distribution, import and export of iron and steel, ferro alloys and refractories and also the development of the input industries relating to iron ore, manganese ore, chrome ore, and refractories and others.

Location of ancillary industries for the steel plants in India

The total in situ reserves of iron ore in the country are about 12,317.3 million tonnes of haematite and 5395.2 million tonnes of magnetite. Haematite resources are located in Odisha, Jharkhand, Chhattisgarh, Karnataka, Goa, Maharashtra, Andhra Pradesh, and Rajasthan. Coal is found in Jharkhand, Odisha, Chhattisgarh, West Bengal, Madhya Pradesh, Andhra Pradesh, Maharashtra, Rajasthan, Gujarat, Tamil Nadu and Jammu and Kashmir.

Indian manganese ore deposits occur mainly as metamorphosed bedded sedimentary deposits associated with the Gondite series of Madhya Pradesh, Maharashtra, Gujarat, and Odisha and with the Kodurite series of Odisha and Andhra Pradesh. The consumption of manganese ore in all industries was about 4.19 million tonnes in 2014-15 as against 4.18 million tonnes in 2013-14.

Initiatives for ancillary industries: Odisha Model

Odisha has identified ancillary industries in the steel sector as a focus sector for growth and there is a strong governmental emphasis on supporting ancillary units. To showcase the business ecosystem, available incentives and infrastructure facilities to the steel ancillary players for manufacturing in Odisha, the Odisha government held a meeting with over 40 downstream companies at Tata Steel Kalinganagar on September 12, 2017. Several ancillary firms from Odisha and other states, such as Jharkhand, West Bengal and Maharashtra among others, attended the meeting.

While addressing the ancillary firms, Sanjeev Chopra, Principal Secretary, Industries Department, Government of Odisha, stated that Odisha has put in place a comprehensive strategy to accelerate the growth of the ancillary sector with committed feedstock and common facilities. Speaking on the industrial ecosystem created for ancillary industries in Odisha, Sanjay Singh, Chairman and MD, IDCO, said, “Ancillary industry in the metal sector is a priority sector for Odisha. In order to leverage this industry, the Government of Odisha has developed investment regions and industrial parks, including Kaliganagar National Investment and Manufacturing Zone, Downstream Aluminium Park at Angul and Stainless Steel Industrial Park at Kaliganagar.”

Odisha is the largest stainless steel-producing state in the country and has 20% of the country’s crude steel making capacity. With the country’s economy expected to grow rapidly in the near future, the requirement for value-added products will multiply, thus offering a good potential for ancillary development in the steel sector.

In 2012, 36 ancillary industries came up with the com-missioning of Posco’s 12 mtpa steel plant near Paradip. The ancillary units included refractory materials, lacing pipes, forged rounds, foundry, steel strapplings, ferro alloys, hard coke, welding electrodes, conveyor belt, belt fasteners, fly ash bricks, calcinated petroleum coke and cotton waste. The state government had signed an MoU with Nalco, JSL Ltd., Jindal Steel and Power Ltd. (JSPL) and Adhunik Metaliks for setting up of industrial clusters.

Iron and steel industry as raw materials

The iron and steel industry is the backbone of the Indian industrial scenario. Iron and steel are the major raw materials for at least nine other major industries which include automobiles, automobile components, construction, defence manufacturing, electrical machinery, railways, renewable, thermal power and oil and gas. The products that can be manufactured from iron and steel industry include barbed wire, blouse hook, clutch plate, copper coated wire, galvanised wire, gem clip hacksaw blades, safety pin, seamless pipe fittings, slotted angles, stainless steel vessels, staple pin, TMT bar, U-clamps, wrought iron furniture and others.  

Prospect of iron and steel industry

The iron and steel industry forms the fundamental part of a number of other industries that constitute global trade and economy. History has it that churns and disruptions in the global iron and steel market can have far-reaching impacts on several ancillary industries including but not limited to construction, automotive, chemicals, energy and heavy engineering. The growth of these application areas, however, also bodes well for the growth of iron and steel consumption. Transparency Market Research finds that while the production of steel demonstrated a marginal decrease in early 2015, growth has got back on track since then.


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