The good news for the India growth story is that greenfield projects like ArcelorMittal and Nippon Steel India’s (AM/NS India ) $7.5-8 billion facility to initially produce 8.2 million tonnes of steel in Andhra Pradesh are finally kicking off. When was the last time there was a foundation-laying ceremony for any greenfield steel project in India? For two decades, such a prospect eluded the best efforts of Lakshmi Niwas Mittal, chairman of ArcelorMittal, the world’s second largest steel producer.
Way back in 2005-2006, he sought to set up 12 mt plants in Jharkhand and Odisha and later in Karnataka, all of which had to be abandoned due to land acquisition problems, failure to secure mining approvals, or a combination of both factors. Seven years ago, AM/NS India finally succeeded in establishing a footprint in the country through the brownfield route of acquiring Essar Steel for around $6 billion.
Speed of the Andhra Deal
That failure on the greenfield front, however, was not only ArcelorMittal’s, as South Korea’s POSCO also could not build a steel project in Odisha. It is largely because of India’s bright prospects these players did not lose heart but kept seeking opportunities and waiting for the right moment. That right moment arrived in a manner that would have surprised even AM/NS India, as the deal was clinched within three months of the N Chandrababu Naidu-led government assuming office in 2024.
Without inking a memorandum of understanding, matters were reportedly fast-tracked through Zoom calls and WhatsApp chats between the AM/NS India top brass and Andhra’s Minister for information technology, human resources, and real-time governance, Nara Lokesh—also the son of the chief minister. Usually, land acquisition problems have bedevilled greenfield steel projects, but in this case, the request for land was put in on August 30, 2024 and the allotment released three months later by the state government.
The advantage that Andhra has is its land-bank as also the fact that its policies are in alignment with those at the Centre. Clearances are faster in such a milieu as 890 out of the 2,200 acres required for this project was earlier allotted to a central project, but was transferred without any problem. AM/NS India also required only a right of way for its existing slurry pipeline that moved ores from NDMC’s Bailadila mines in Chhattisgarh to its pellet plant in Visakhapatnam.
Like AM/NS India’s project, the policy environment must incentivise more greenfield facilities to “steel up” the growth story. To be sure, other steel majors are gearing up with big-ticket plans to ramp up capacities, aggregating to 130 mt, all of which can enable India to double its crude steel capacity to 300 mt per annum in less than a decade to enable a steel-intensive push to become a more developed nation.
Scaling to 300 MT
Such investments no doubt depend on a more stable policy and regulatory framework. Reforms to free up land and labour markets and improving the environment to do business in states like in Andhra are imperative. It would certainly help potential investors if resource-rich states built a land bank or evolved innovative policies to enable farmers to part with their land for such projects. Forest and environment clearances must be speeded up. As India needs more steel for its fast-growing economy, there is no escape from more greenfield facilities like the one coming up in Andhra.