How Odisha became the largest investment destination for Tata Steel in India

Since 1907 when the legendary Jamshedji Tata set up India’s first steel plant at the present-day Jamshedpur, the people of Odisha carried a grievance with them. That the Tata Group built its factory in Bihar (now Jharkhand) despite taking raw materials from neighbouring Odisha.

The steel plant extracted iron ore from the then princely state of Mayurbhanj in north Odisha to produce steel from its Jamshedpur plant. Even people within Tata agree that during the early years, the plant was fully dependent on the Odisha ore. The extraction also exhausted the Badamphara, Gorumahisani and Suleipat iron ore belts in the Maurbhanj district.

While it is unknown whether this prompted Odisha's legendary leader Biju Patnaik, with then Industries minister George Fernandes, to push for the nationalisation of the Tata Steel plant when he was the Union Steel and Mines Minister in the Morarjee Desai Cabinet, Odisha's patriarch Patnaik managed to sell the ailing Charge Chrome Plant of OMC Alloys to Tata Steel in September 1991, during his second stint as Odisha's Chief Minister.

Tata Group then went on to set up its first steel plant in Odisha during Naveen Patnaik's regime at Kalinganagar. It also acquired another steel unit in the state's Dhenkanal district besides taking over the public sector Neelachal Ispat Nigam Limited (NINL) in the state's Kalinganagar.

Yet, comparisons with the Jamshedpur plant, which had a higher capacity than all of those in Odisha, remained.

Not anymore. The century-old woe has now been erased with Tata's Phase-II expansion and the commissioning of a new blast furnace, billed as India's largest, at the Kalinganagar plant on Saturday. This took Tata Steel Odisha’s capacity to 14.6 MT, compared to 12 MT of its Jamshedpur unit.

With the Phase-II expansion, Odisha also emerged as the largest investment destination in India for Tata Steel while it took almost a century for the Jamshedpur unit to reach the 12 MT capacity.  

Interestingly, this record was achieved during the tenure of Chief Minister Mohan Charan Majhi, who represents the mineral-rich Keonjhar district, where the maximum iron ore mines of Tata Steel are located.

Tata in Odisha

Though the then Prime Minister P V Narasingh Rao laid the foundation for Tata Steel’s second steel plant at Gopalpur on the southern coast of Odisha and 3,000 acres of land was acquired for the same in 1995, the project could not materialise due to several reasons, including local opposition and water availability.

In 2004, when Naveen Patnaik became Chief Minister, Tata Steel signed a MoU with the government to set up its second steel project at Kalinganagar industrial area of Jajpur district, by the side of Daitary-Paradeep Expressway. The plan faced strong opposition from displaced people, leading to the death of 14 persons, including 13 tribals, in police firing in January 2006.

The firing was later justified by the Judicial Commission yet the ghastly incident shocked everybody not only in Odisha but outside.

Also read: Inquiry report into 2006 firing at Tata plant riles opposition in Odisha

In 2010, Tata Steel, with the support of the state government, began work on the project. The first unit with a capacity of 3 MT was commissioned in 2015. The second-phase expansion to add another 5 MT capacity began in 2016, the commissioning of which was done on September 21.

The second phase expansion entailed Rs 27,000 cr, taking the capacity of the Kalinganagar plant to 8 MT. With this, Tata Steel’s India capacity stands at 26.6 MT, closing the gap with JSW Steel at 28.3 MT.

The new blast furnace with a volume of 5,870 square metres was inaugurated by T V Narendran, CEO and Managing Director, Tata Steel. This allowed the oldest steel maker to boost the plant’s overall production capabilities so that it could meet the growing demands of various industries, including automotive, infrastructure, power, shipbuilding and defence. It will also provide advantages in specific areas like oil and gas, lifting and excavation and construction, the company said in a statement.

With the new furnace up and running, Odisha has carved out the largest pie of Tata Steel’s capacity anywhere in the world.

Tata Steel acquired Neelachal Ispat Nigam (NINL), a public sector unit with a capacity of 1 MTPA, in 2022, adjacent to Kalinganagar. Jointly promoted by central and state PSUs, NINL was acquired at a cost of Rs. 12,100 cr.

Besides, Tata Steel, in 2018, acquired a private sector steel plant Bhushan Steel of 5.2 MT capacity in the Dhenkanal district at Rs. 34,000 cr. Tata got this property after insolvency proceedings were initiated against the promoter in July 2017. All three capacities of Tata Steel in Odisha have a combined production capacity of more than 14 MT.

The indications are that future expansion is being planned in Odisha, including the third phase in Kalinganagar and at NINL and Dhenkanal district.

Tata's statement

On the development, Narendran: "A key enabler of socio-economic development in the region, the expansion not only strengthens Tata Steel’s position as a leader in high-end, value-added steel segments but also showcases our advanced engineering prowess. It underscores our commitment to boosting private investment in India, aligning with the nation’s vision for self-reliance and sustainable industrial growth."

Dr Pradeep Bal Samant, Minister of State for Cooperation, Handloom and Textiles in the Government of Odisha, expressed his happiness. "I am happy that Tata Steel’s production capacity in its three facilities is the highest and has surpassed its original base at Jamshedpur. I thank Tata Steel," he said.

The key facilities in phase II expansion at Kalinganagar also include a pellet plant, coke plant and cold rolling mill each incorporating advanced technologies and sustainable practices, said the company in a statement. It added that the new steel plant incorporates modern technologies focused on value-added products, operational efficiency and a significant reduction in carbon footprint.

According to the Government of India, Odisha has been the largest steel producer in the country and its installed capacity was 33.36 MT before Tata Steel’s second phase was commissioned. By 2030, the state is expected to reach 130 MT.