Karnataka is a state that is rich in mineral resources. It is also one of the leading industrialized states of the country. The iron and steel industry of the state plays a very important role in its growth and development. It is one of the key industries required for industrial progress.
Various important industries like the construction, power plants, heavy and light machine, automobile, etc. depend on the iron and steel industry for their growth and expansion. The mineral resources of Karnataka have helped the iron and steel industry to flourish in the state. As of 2014-15, India was the largest producer of sponge iron and the third largest producer of raw steel in the state.
Karnataka, with its rich resources of iron ore, is one of the pillars of the national iron and steel industry. Districts like Bellary, Chitradurga, and Chikmagalur are the nerve-centres of the iron ore deposits in the state. The steel production capacity of the 18 units in the state is about 22 MMTPA at present.
Key factors influencing the growth of the iron and steel industry in Karnataka
The history of the iron and steel industry in the state can be traced back to the pre-independence era. It started with the establishment of the Mysore Iron Works (now known as Visvesvaraya Iron and Steel Plant) at Bhadravati in 1923. It was established under the supervision of Sir M Visvesvaraya. Mysore Iron Works was the first public sector steel plant in the country. Starting with it, the iron and steel industry in Karnataka has come a long way today. There were many ups and downs along the way. But the industry continued to flourish in the state. Today the industry produces more than 15 million tonnes of steel annually. The main reasons behind the growth of the iron and steel industry in Karnataka are:
- Karnataka has vast resources of iron ore. It is one of the most essential raw materials needed for the iron and steel industry.
- Four different types of iron ore resources are found in Karnataka. They are hematite, magnetite, titaniferrous magnetite, and limonite and goethite.
- The iron ore reserves found in Karnataka is of high quality. High grade magnetite and haematite are widely found in the state. Karnataka boosts of importing high grade iron ore to South Korean and Japanese steel majors.
- Karnataka has 24 mines of iron ore under the private sector. There are 2 mining leases in the public sector.
- The state is also rich in other mineral deposits needed for the iron and steel industry. These include minerals like manganese, lime stone, silica, etc. They are easily available for commercial exploitation.
- The rapid industrialization in Karnataka is leading to the construction of buildings, rail tracts, industrial plants, bridges, etc. All these are increasing the demand for iron and steel in the state.
- Karnataka has many steel plants that are contributing to the industry’s growth in the state.
- The state houses two of the thirteen major steel plants in India. They are the Visvesvaraya Iron and Steel Plant (VISL) in Bhadravati and the JSW Steel in Hospet, Bellary.
- Availability of labour is a prerequisite for any industry. Karnataka has available human resource needed for working in the steel plants.
- Good communication and other infrastructure facilities are helping the growth of the iron and steel industry in the state.
- Karnataka has a wide market for iron and steel in the state. The constant implementation of various big and small industrial projects is adding to the demand for iron and steel in the state.
Policies and initiatives by the state government
The iron and steel industry in Karnataka is a multi-crore industry. It plays a big role in the economy of the state. There are a number of steel plants in Karnataka. They provide employment to a large number of people in the state. The industry also draws a significant amount of investment for the state. The state government has come up with various policies and initiatives to help the industry grow bigger and stronger. These policies and initiatives include the following:
- The government of Karnataka has plans to set up an industrial park for the iron and steel industry in the state. The government plans to attract huge investment and create around two lakh jobs through the industrial park. There is also plan to establish a township linked to the industrial park.
- The state government has planned a steel corridor of 300 km length to boost the iron and steel industry in the state. This corridor is proposed to be located around the Hospet-Bellary area in the state. This area is known to be rich in iron ore. The steel zone will cover districts like Bagalkot, Gadag, Koppal, Haveri, Raichur, and Bellary.
- The government plans to establish a high-speed train connection, a port, and a nuclear power plant to develop the steel corridor.
- There are 11 major integrated steel plants that are in different stages of implementation in the state.
- The state government has plans to come up with a policy decision regarding the allotment of mining leases in the state. The lease policy is for captive consumption that follows the directives delivered by the Supreme Court and the MMRD Act. The government plans to give priority to value addition while assigning the mining leases.
- The Karnataka government proposes to provide infrastructure facilities needed for the growth of the iron and steel industry.
- The state government uses the e-auction method to sell the iron ore mined in the state. This has simplified the whole process of purchasing iron ore in the state.
Challenges faced by the iron and steel industry
The iron and steel industry has covered a long journey in the state. But this journey has not been smooth altogether. Even today there are several factors that are posing a challenge for the industry’s growth in the state. Some of the main challenges faced by the iron and steel industry in Karnataka are as follows:
- The shortage of high quality iron ore is causing a problem for the production of iron and steel in the state.
- Currently Karnataka produces around 27 MTPA iron ore. This is much lower than the demand of the iron and steel plants in the state. The demand and supply of iron ore has to be balanced for smooth growth of the industry in the state.
- There are several high profile iron and steel companies in the state. These include JSW Steel, Tata Metaliks, Sunflag Steel, Kalyani Steels, etc. But not a single company has a captive mine linked to its projects. That is why the companies have to depend on merchant miners for the raw materials.
- Though the state has abundant iron ore resources, illegal mining activities had forced the Supreme Court to put a halt to such activities in 2012. This has impacted the growth of the industry. Even the production of a major steel plant like the JSW Steel was impacted by the ban on mining in the state.
- The iron and steel industry needs coal in large amounts. The rising price of coal is impacting the industry.
- Setting up of a new iron and steel industry requires huge capital. The lack of such capital makes it difficult to establish many steel plants in the state.
- Pollution control is another challenge that the industry has to handle in order to make progress in the state.
Investment opportunities in the iron and steel industry in Karnataka
Karnataka offers attractive investment opportunities in the iron and steel industry sector. Some of the points that highlight Karnataka as a destination for investment in the iron and steel industry are:
- Reduction in stamp duty and loan agreements
- Exclusion from entry taxes
- Availability of interest-free loans
- Subsidy for anchor units and interests
- Availability of mineral and human resources
- Allocation of free mineral locations for steel companies
- Concessions for mega projects in the iron and steel sector
- Financial incentives to the industry under the Karnataka Industrial Policy
- Availability of land for setting up of steel projects in the state
The future of the iron and steel industry in Karnataka
Karnataka has huge reserves of high-grade iron ore. The presence of iron ores and coal mines in the same areas is another added advantage that Karnataka possesses. Easy transportation facilities for raw materials are available within the state. The state has skilled human resources having the technical knowledge needed to work in high profile steel projects.
The state government of Karnataka has an investor-friendly industrial policy. With so many advantages, the iron and steel industry is bound to flourish and reach greater heights in the future. Despite the challenges, the road ahead does look bright for the iron and steel industry in Karnataka.
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