Old Technology Pushes Up Cost Of Indian Steel: Study

The performance of Indian steel industry is much below international standards due to inferior state of technology and the government needs to invest Rs 150 crore every year on research and development, according to a report on steel industry submitted by the working group for the ninth plan.

The technological performance of Indian steel plants in terms of specific energy or power consumption, specific consumption of raw materials and environment and pollution norms is significantly lower than those of advanced countries.

On the other hand, the newly commissioned direct reduced iron (DRI) plants, particularly the gas based ones, compared favourably, but they too are yet to establish good performance.

 

The steel industry has grown over the last four decades, using the coke oven, blast furnace and basic oxygen furnace technology in the primary sector and the scrap-based electric arc furnace (EAF), the mini blast furnace, DRI-based EAF and the induction furnace based plants.

In spite of the inferior state of technology, the cost of production is low due to low cost of primary raw materials and labour.

The report points out that these two advantages may be eroded in the near future making Indian steel less competitive, unless technology improves significantly.

For example, in India 26 per cent of the steel is produced by open hearth process which is considered obsolete in other advanced countries.

Capacity utilisation of hot-strip mills range between 64 and 66 per cent compared to international standard of 80 to 85 per cent while that of cold rolling mills is between 48 and 50 per cent against an international average of 75 to 80 per cent.

Energy cost accounts for nearly 31 per cent of the cost of production of steel in India.