Subject: Indian Geography

The evolving dynamics of the iron and steel industry have led to a significant shift in their location patterns, moving away from traditional raw material-oriented sites to market-oriented and port-based locations.

Factors Driving Location Shift

Economic Factors

• High Transportation Costs: According to NITI Aayog, freight cost from Jamshedpur to Mumbai is USD 50/tonne, significantly higher than international routes (Rotterdam to Mumbai: USD 34/tonne).
• Logistics Expenses: In India, logistics costs constitute 16-18% of total steel revenue compared to global average of 10-12%.
• Energy Efficiency: As per Ministry of Steel, Indian integrated steel plants consume 6-6.5 GCal/tonne compared to international standards of 4.5-5.0 GCal/tonne.

Market-Oriented Factors

• Proximity to Markets: Modern steel plants like JSW Dolvi (Maharashtra) and RINL Visakhapatnam are located near consumption centers.
• Port-Based Location: Coastal plants reduce import costs for coking coal and facilitate finished product exports.
• Infrastructure Development: Sagarmala and Bharatmala projects are improving connectivity between production and consumption centers.

Policy Initiatives

• National Steel Policy 2017: Encourages establishment of new plants in strategic locations.
• Special Economic Zones: Provides incentives for steel industries in non-traditional locations.
• Make in India: Promotes private investment in steel sector across diverse locations.

Examples of Location Shift

• Traditional Location: Jamshedpur (near iron ore).
• Modern Locations:
  • Hazira (Gujarat): Port-based plant.
  • Salem (Tamil Nadu): Market-oriented location.
  • Dolvi (Maharashtra): Coastal location with market proximity.

The iron and steel industry's locational shift represents a strategic response to changing economic dynamics, demonstrated by the success of plants like RINL Visakhapatnam and JSW Dolvi, which prioritize market access and logistics efficiency over proximity to raw materials.