LOCALIZATION FACTORS OF IRON AND STEEL INDUSTRY

• Raw Material
• Market
• Transportation
• Labour
• Government Policy
• Technology

Raw Material

• Iron and Steel industry is a Weight Losing Industry (Material Index, M.I. > 1). All the raw materials of this industry - Coking Coal, Iron Ore, Limestone, Dolamite, Mn are heavy and bulky.
• Location is governed by proximity to raw materials particularly coking coal and Iron ore.
• Localization either near coal and Iron ore or in between.
• VISW is an exception, located far from main coal producing areas. Earlier it used locally available charcoal and now using HEP from Sharavati Power Project.

Market

• Finished steel products are quite bulky, and transport cost per tonne km of steel product is about 3 times more than that of coal and iron ore. Therefore market plays an important role in localization.
• Agglomeration of market forces brings economics in the cost of production, thus making market favourable location.
• One of the major consumers of steel industry is Automobile industry which in itself prefers a market location. These industries have also raised the importance of market for iron and steel industry. Further their waste in the form of scrap provides additional raw material for iron & steel industry.

Transportation

• Both raw materials & finished products are bulky and require big transportation facilities.
• Optimum transportation cost of carrying raw materials from source and finished products to market play important role.
• However, setting up of large integrated steel plants boosted the growth of infrastructure, especially road and rail links in these regions.

Technology

• Increasing popularity of Open Hearth Process. It uses scrap as raw material (1/2 of world's raw material). It is easier to transport in raw form. Therefore, changed location of industry from traditional raw material site to market.

Port Location

• Port locations provide easy and cheap means of transportation. These are also highly helpful in the import of raw materials and export of finished products.
• The Vizag Plant is a glaring example of this kind of location.

Government Policy

• Trickle down hypothesis for balanced regional development guided tremendously the location of I&S industry in the backward regions.
• Policy of developing Growth Centres & Growth Poles with I&S industry as their core also influenced its location in India.
• Political lobbying at times influences greatly its location.
• VISW Plant was set up to fulfill Defence requirements.

Labour

• Cheap and abundant labour is required for this industry. Therefore Chottanagpur, West Bengal and the nearby regions were favourable locations.