Ancillary and downstream industries in metals such as steel and aluminium, is listed as one of the six focus sectors by the state government in its Industrial Policy Resolution (IPR), 2015. Despite accounting for around 20 per cent of the country’s crude steel output and leading others in stainless steel production, there is scarcely any downstream steel activity in the state. Odisha is home to leading steel makers like Tata Steel, Jindal Steel & Power Ltd (JSPL), Bhushan Steel and Jindal Stainless to name a few manufacturers. Downstream steel parks are expected to provide impetus to value addition besides boosting steel consumption in the state. Although Odisha produces nearly 22 million tonnes of steel each year, hardly 10 per cent is consumed within the state due to lack of demand.
Commenting on the downstream steel park, Sanjeev Chopra, principal secretary (industries), Odisha said, “The state government is going to engage a consultant shortly for deciding the modalities of the park. Our aim is convert at least 50 per cent of the hot metal into finished, value added steel products by 2030."
He refused to spell out the details on the downstream park, citing the proposal was still at a preliminary stage.
Sources close to the development said, a few Tata Group companies such as Tinplate Company of India Ltd and Jamipol and others like BMW Industries have shown interest to put up facilities at the downstream park. The state government is also learnt to initiate discussions with a few more steel downstream players.
Tata Steel did not respond to an e-mail questionnaire sent by Business Standard.
In September last year, the Odisha government has held talks with about 70 steel downstream companies, soliciting their investments. The meet at Kalinganagar in Jajpur district, was attended by several ancillary firms from Odisha as well as states like Jharkhand, West Bengal, Andhra Pradesh, Kerala and Maharashtra.
The presence of large steel and stainless steel players like Tata Steel, Jindal Stainless Ltd (JSL), Jindal Steel & Power Ltd and Bhushan Steel ensure that there is no dearth of raw material for the downstream metal sector in Kalinganagar. Opportunities for downstream and ancillary industry exist in areas like equipment manufacturing, foundries, flat and cold rolled products, fabrication, machining and precision equipment, appliances & white goods, auto components, fasteners and kitchenware.
A report by leading consultancy KPMG has pegged the investment at Rs 12 billion on infrastructure development to develop a full-fledged ecosystem for downstream steel industries. It has suggested establishment of six downstream steel parks at Jharsuguda, Rourkela, Barbil, Paradip, Sambalpur and Dhenkanal for greater value addition of steel within the state with supplies of molten material from the mother plants. Each downstream park has the potential to create employment for approximately 5,000 people.
States like West Bengal, Maharashtra, Gujarat and Tamil Nadu with employment in the iron and steel making close to half of Odisha, have many times more employment in the metal casting industry than the state. A large proportion of the iron and steel produced in the state are put to value addition in other states like Andhra Pradesh and West Bengal and has resulted in poor growth of the ancillary and downstream industries. Odisha has one of the lowest casting to manufacturing ratios, lesser than the neighboring states like Jharkhand, Chhattisgarh and Gujarat.
KPMG has suggested that the state government should bring in a mechanism to enable commitment from the anchor units for supplying of at least 20 per cent of the intermediate or finished products to the downstream industries in the state.