On 27 January 2021, the Cabinet Committee on Economic Affairs (CCEA) gave in-principle approval for the 100% strategic disinvestment of the Government of India’s shareholding in Rashtriya Ispat Nigam Limited (RINL), the corporate entity that owns and operates the Visakhapatnam Steel Plant (VSP). The proposal also envisaged the transfer of management control to a strategic buyer as part of the privatization process. The Government stated that the decision was intended to attract private investment, modern technology, improved operational efficiency, and long-term financial sustainability for the company.

The announcement triggered widespread protests by employees, trade unions, and political parties in Andhra Pradesh, who argued that VSP was a valuable national asset and opposed its privatization. One of the major concerns raised was that RINL had no captive iron ore mines, which significantly increased its production costs and contributed to its financial difficulties.

VSP Background 

The Visakhapatnam Steel Plant occupies a unique place in the collective memory of the people of Andhra Pradesh. It is not viewed merely as a public sector enterprise but as the outcome of a historic people’s movement. During the 1960s, following the recommendations of the Steel Plant Location Committee, the demand for establishing a steel plant at Visakhapatnam gathered momentum. When the project was delayed, widespread agitations erupted across the State under the slogan “Visakha Ukku – Andhrula Hakku” (Vizag Steel is the Right of Andhras). Students, workers, farmers, political parties and civil society participated in the movement. More than 30 people lost their lives in police firing during the agitation, making it one of the most emotionally significant public movements in the State’s history. Eventually, the Central Government announced the establishment of the steel plant, and the foundation stone was laid by Prime Minister Indira Gandhi on 20 January 1971. 

The emotional attachment to VSP extends beyond its origins. Around 16,000 families parted with their land for the project, viewing it as an investment in the industrial future of Andhra Pradesh. Over the decades, the plant transformed Visakhapatnam into one of India’s major industrial centres, generating direct and indirect employment for tens of thousands of people and supporting a large network of ancillary industries. Consequently, any proposal to privatise the plant has been perceived by many people in Andhra Pradesh not merely as a policy decision but as one affecting a symbol of the State’s collective sacrifice and industrial aspirations.

Revival package 

Following the change in the political equations in AP post 2024 general elections, the Union Government approved a ₹11,440 crore revival package for RINL on 17 January 2025. While this marked a clear shift toward reviving the plant as a government-owned enterprise, the Government has not officially withdrawn or rescinded the 2021 Cabinet decision on strategic disinvestment. Out of Rs.11,440 Crs Rs.10,300 Crs are towards equity infusion and the balance Rs.1,140 Crs for conversion of working capital loan into preference share capital. The objective of this revival package is to restore working capital, procure raw materials, restart production, stabilize finances, protect employment, and enable the plant to operate at full capacity. Earlier too RINL took additional funding support from the government in the form of 7% non-cumulative redeemable preference shares Rs.2937.47 Crs, which was fully redeemed during the period 2011-12 to 2015-16. 

Why the package was needed?

By 31 March 2024, RINL’s financial condition had become critical. The company had exhausted its bank borrowing limits, defaulted on loan repayments, faced severe shortages of working capital and raw materials, intermittently shut down blast furnaces due to lack of coking coal. RINL also has a substantial interest burden on the loans raised for its plant expansion.

As of mid-2026, all three blast furnaces (BF-1, BF-2 and BF-3) at the Visakhapatnam Steel Plant (VSP/RINL) are functional and in operation. The situation has improved significantly compared to 2022–2024, when the plant was forced to operate with only one or two furnaces because of severe shortages of working capital and imported coking coal. Production subsequently rose to around 93–94% of installed capacity (7.3 million tonnes per annum), with all three blast furnaces returning to operation. 

VSP continues to be:

• Bharat’s first shore-based integrated steel plant, 
• one of the largest public-sector integrated steel plants in the country. 

Captive iron ore issue

A long-standing structural challenge remains unresolved:

Unlike major integrated steel producers such as Steel Authority of India Limited, Tata Steel and JSW Steel, RINL does not have captive iron ore mines. As a result, it must purchase iron ore from external suppliers, making it more vulnerable to fluctuations in raw material prices and affecting its cost competitiveness. This has been identified as one of the key reasons for its recurring financial stress. VSPs long-term success will depend on resolving structural issues—especially access to economical iron ore, financial discipline, and continued modernization. 

RINL currently possesses about 19,730 acres of land. The market value of this land is widely estimated by industry observers and employee unions to exceed ₹1 lakh crore, although no official valuation has been released. The integrated steel plant itself occupies 11,794 acres, which, according to RINL, is sufficient to expand the plant’s capacity to around 11 million tonnes per annum (MTPA).

Missed opportunities 

Originally, 9,798 acres of state government land were transferred to RINL, taking its total landholding to 21,592 acres. Over the years, RINL has leased or transferred about 1,862 acres to various agencies, including Indian Railways, the Andhra Pradesh Government for the development of Gangavaram Port, and the National Highways Authority of India (NHAI), leaving it with approximately 19,730 acres. In March 2021, Adani Ports acquired an 89.6% stake in Gangavaram Port, comprising the stakes held by DVS Raju & Family and Warburg Pincus. In September 2021, Adani Ports acquired the remaining 10.4% stake from the Government of Andhra Pradesh, making Gangavaram Port a wholly owned subsidiary. Today, most of RINL’s imported coking coal is handled through Gangavaram Port.

Notably, in the early 2000s, RINL had proposed developing a captive port at Gangavaram to support its steel plant. However, the proposal was not accepted by the then Andhra Pradesh Government, which instead decided to develop Gangavaram as a privately operated deep-water port. Consequently, RINL transferred about 1,100 acres of its land for the port project and, in return, received monetary compensation along with alternative land at Kotapadu, located roughly 100 kilometres from the coast. 

VSP is the only integrated steel plant in the country established entirely without any budgetary support from the Government of India. Vizag Steel Plant is the only steel-manufacturing PSE in the country that has no captive iron ore mine. Parliamentary standing committee on Coal and Steel way back in May, 2015 strongly reiterated its recommendation to the government to allot iron ore blocks to state-run steel major RINL. RINL has requested State Governments viz. Odisha, Chhattisgarh and Andhra Pradesh for recommending reservation of iron ore deposit under 17A(2A) of MMDR Act, 2015, to Ministry of Mines, Government of India. Ministry of Steel has also requested State Government of Odisha for allocation of an iron ore block in favour of RINL through reservation route. 

In the original Detailed Project Report (DPR) prepared for VSP, a captive jetty was mooted at Gangavaram, on its backyard, so as to put the freight cost at bare-minimum. Adani Ports acquisition of Gangavaram Port has raised concerns among some observers regarding RINL’s long-term logistics costs and dependence on a privately owned port. Similarly, allotment of Deposit No. 4 of Bailadila iron ore mines in Chattisgarh belonging to NMDC to RINL was also part of the original DPR, which has not been done till date and has taken a different twist as under. 

NMDC-CMDC is a joint venture wherein NMDC owns 51% stake and Chhattisgarh Mineral Development Corporation (CMDC) owns the 49% stake. On September 30, 2019, the Ministry of Mines, Government of India gave its approval for the reservation of Bailadila iron ore Deposit-4 in favour of NMDC-CMDC for prospecting and mining of iron ore. Adani Enterprises Ltd (AEL) was the successful bidder to be the mine developer-cum-operator (MDO) for the Bailadila Iron Ore Deposit. Bailadila Iron Ore Mining Private Ltd is created as a special purpose vehicle for Adani Enterprises Ltd (AEL) which will act as a contract miner for Bailadila iron ore mine.

Memorandum of Understanding (MoU) was signed with South Korean steel major POSCO by RINL on October 23, 2019, for floating a joint venture company for construction of 5 MPTA greenfield integrated steel plant on the land of RINL. However, this has not taken off so far. In January, 2022 Adani Enterprises Limited announced that POSCO and the Adani Group have agreed to explore business cooperation opportunities, including the establishment of a green, environment-friendly Integrated Steel Mill at Mundra, Gujarat, as well as other businesses. The investment is estimated to be up to USD 5 Billion. The collaboration includes evaluating a joint Integrated Steel Mill at Mundra, Gujarat, based on POSCO’s state-of-the-art technology and cutting-edge R&D capability.  

Critics opine that the above developments have not only totally blocked the chances of RINL getting iron ore supply from Bailadila, down the line POSCO may scrap its MOU with RINL for construction of an integrated steel plant on the land of RINL. Critics also foresee that POSCO and Adani Enterprises Ltd may form a JV and take over the RINL since the GOI has given in principle approval for the sale of RINL, lock stock and barrel. Critics also feel that post acquisition of RINL, AEL can ensure direct supply of iron ore on mining the same from Bailadila to RINL which is located at around 600 KMs, thereby making the takeover of RINL highly profitable.   

Proposal for two more steel plants in Andhra Pradesh

Interestingly for the proposed ArcelorMittal Nippon Steel India (AM/NS India- 8.2 MTPA with ultimate planned capacity of 17.8 MTPA) integrated steel plant at Rajayyapeta in Anakapalli district, Andhra Pradesh (which is around 80 KMs from VSP) it is reported that the government is inclined to give an incentive package worth up to Rs. 28,000 Crs to be disbursed over 20 years linked to certain performance linked parameters, adherence to certain implementation timelines and meeting employment generation commitments. AM/NS India already owns and operates captive iron ore mines in Odisha at Thakurani Iron Ore Mine and Sagasahi Iron Ore Mine. These mines have a combined production capacity of around 12.7 million tonnes per annum and currently supply the company’s integrated steel operations. Anakapalli steel plant is instead being developed with a captive port, dedicated rail connectivity, and access to AM/NS India’s existing raw-material supply chain. In view of the above factors, Anakapalli Steel Plant will certainly have competitive advantages over VSP. 

For the proposed steel plant at Kadapa by JSW it is reported that the government has given concessions like 1,100 acres at ₹5 lakh per acre, provision of water, power, and infrastructure support by the government, Additional government land alienation to facilitate the project. 

However, no captive iron ore block has yet been allotted specifically to the Kadapa steel plant. The project is expected to source iron ore through a combination of long-term commercial contracts, NMDC and merchant miners, and potentially future iron ore resources within Andhra Pradesh as they are developed. JSW is developing this steel plant Investment with an investment of ₹16,350 crore (1 MTPA with ultimate planned capacity to 2 MTPA), located at Sunnapurallapalli and Peddadanluru villages in YSR (Kadapa) district.  

The proposal to set up two new steel plants as mentioned above is a welcome sign. However, the government should not neglect VSP which has a vast potential to become one of the leading players in India. The Union government may persuade Odisha and Chattisgarh states to allot iron ore blocks in favour of VSP through reservation route which will ensure captive raw material supply to VSP and a level playing field for RINL with other PSE steel companies. In return the Union government may disinvest part of its equity to the entities that own the iron ore mines at Odisha and Chattisgarh. VSP should also be allocated a dedicated captive bulk handling terminal at Vizag and Gangavaram Ports that are near to its steel plant. If these policy measures are taken to address the structural issues, VSP will bounce back and the phoenix will rise again to become financially self-reliant, go ahead with its plant expansion around 11 MTPA initially, with scope for further expansion in the future and become a leading player globally.