In a civil suit filed in Japan, Nippon Steel has charged Posco with illicitly acquiring its patented technology and the trade secret related to Cold rolled Grain Oriented Steel Sheets (GOES), which are primarily used to make electric transformer for distribution of electricity. The suit worth $1.23 billion filed in the US and Japan against Posco and one former employee of Nippon has sought to prohibit production and marketing of CRGO steel sheets by Posco, which has been making this product in its Japanese and US subsidiary plants.
Of the total market of CRGO, the market share by Posco has been estimated to be 20% which is exceeded by Nippon steel at 30%. It is also reported that the accused namely, the former employee of Nippon was trying to sell the technology to China.
In India there is no indigenous supplier of CRGO steel and with maximum thrust on power supply, the government has formulated a special policy for UMPPs, each with more than 4000 MW capacity. Addition of 50326 MW electricity in 11th plan has been targeted to go up to 75000 MW in 12th plan.
The current demand of around 1, 50,000 t of CRGO is slated to rise at a high rate coinciding with the setting up new power plants in the country.
In order to encourage the power sector, the government in 2012 Budget has brought down the customs duty on coating material for manufacture of electrical steel sheet from 7.5% to 5%. Power plant equipment have already been given duty free facility which is posing big challenges for the domestic capital goods industry.
This whole episode may, for the time being, make the transfer of technology for CRGO to India a little more difficult. SAIL is shortly converting the strategic Alliance with Posco into a joint venture. Bhel is reported to be joining hands with RINL for production of CRGO. But the risks of CRGO technology transfer are now manifold and complicated. After spending huge sums towards royalty and setting up the plant as well as fulfilling other conditions of IPR, if the transferred technology is found to be a stolen one, the consuming plant would be subjected to a terrible state of deprivation, loss of credibility, mistrust and highest scale of unethical practices.
Only recently Posco has been ranked third in the list of most admired companies in the Metal sector(Forbes list) following Alcoa and Arcelor Mittal and just above Nippon steel. The allegation has an adverse implication on the reputation, goodwill and credibility of the firm willing to invest around R54,000 crores in setting up a green field steel plant in Odisha. A dark side of global competition is getting unfolded. The author is DG, Institute of Steel Growth and Development. The views expressed are personal