Under fire, steel firms scrap powerful lobby

The Indian Steel Alliance, the high-profile lobby group for big producers representing approximetly half of India's steel production, is being dissolved, seven years after it was set up to promote steel usage in the country.

This was confirmed by Sajjan Jindal, vice-chairman and managing director of JSW Steel and a key member of the alliance.

"ISA is increasingly being perceived as a forum for cartelisation. In such circumstances, it is better to stay away from it," said an industry source, adding: "The association has not been active enough in representing the issues the industry faces."

On Sunday, state-owned Steel Authority of India Ltd had pulled out of ISA in a bid to distance itself from the recent price-rise controversy and had said the alliance had outlived its utility.

Tata Steel exited ISA in 2004 after differences arose amongst its members over pricing of steel products. SAIL's departure has left JSW Steel, Essar Steel, Ispat Industries, Jindal Steel & Power and government-owned Rashtriya Ispat Nigam Ltd in the alliance.

Last month, Finance Minister P Chidambaram accused steel companies of acting as a cartel after rising prices of the commodity pushed the inflation rate to above 7 per cent.

In its defence, the alliance had said that the rise in prices was caused by the sharp hike in prices of raw material. "As against the increase of 100 to 300 per cent in the prices of raw material used for steel making, the price of steel in India has increased by 24 per cent in the last one year," it had said.

Another member said some members had written letters last week to ISA President Moosa Raza, expressing their views on the alliance's role and its effectiveness as a representative industry body. Raza could not be reached for comment.

Some members also felt that the ISA does not represent the interests of the entire steel industry, especially the secondary producers of long products used in construction.

The steel industry now wants to play safe and, therefore, plans to fight its cause of promoting steel usage, which was one of the primary objectives for setting up ISA, through the Institute for Steel Development and Growth. This institute is promoted by the ministry of steel, SAIL, Tata Steel, JSW Steel, RINL, Essar Steel and Ispat Industries.