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1. Introduction
At the time of independence in 1947, India had only three steel plants - the Tata Iron & Steel Company, the Indian Iron and Steel Company and Visveswaraya Iron & Steel Ltd and a few electric arc furnace-based plants. The industry, which operated with a capacity of about one million tonne, was completely in the private sector. From its modest position at the time of independence, steel industry in India has come a long way, with the country having risen to the position of the fifth largest crude steel producer in the world. Since 2002, India has also maintained the position of largest direct reduced iron (DRI) or sponge iron manufacturer in the world. India's iron and steel industry occupies an important position in the country's economy and it contributes around 2 per cent of the country's gross domestic product and employs five lakhs people.
The first major change in the Indian steel industry came during the first three Five-Year Plans (1952-1970) when iron and steel industry was earmarked for the public sector. From the mid-1950s to the early 1970s, the Government of India set up several large integrated steel plants in the public sector at Bhilai, Durgapur, Rourkela and Bokaro. The policy regime during this period involved, licensing of capacity, capacity control, reservation of large-scale capacity creation for the public sector units, pricing controls, quantitative restrictions and high-tariff barriers, controls on imports of inputs, including technology, capital goods and exports. Due to the large-scale capacity creation in the public sector during the above period, crude steel production grew to nearly 15 million tonnes in the span of a decade from the one million tonne output at the time of independence.
During the 1970s, the secondary sector, i.e. small-scale steel producers who use the scarp-DRI-based electric arc furnace/induction furnace came into existence. The semi finished steel produced by this segment, in turn led to the commissioning of a large number of re-rolling units to convert the semi finished steel into bars and rods.
However, the growth trend seen during the 1950s and 1960s could not be sustained from the late 1970's onwards, as the public sector which dominated the steel sector was beset with bureaucratic hurdles and inefficiencies. This trend was reversed...