The Globalization of Indian Firms from Steel to Software
Appendix A: note on the Indian steel, construction equipment, and auto-component industries
Appendix A A note on the Indian steel, construction equipment, and autocomponent industries Before economic liberalization in 1991, the Indian government exercised pervasive, continuous but variable controls on every aspect of industrial activity. A policy of import substitution in the late 1950s led to a highly protected and inward-looking regime in which the private sector played a limited role. This regime continued until the early 1980s. The focus of policy was to foster indigenous technology, reduce the role of foreign ownership, limit foreign investment, and promote manufactured exports. Exports were regarded as important to the extent that they could ﬁnance products or inputs not manufactured in India. A policy of quantitative restrictions on imports helped to protect products manufactured in India. Imports of manufactured consumer goods were banned and intermediate products and industrial spares were allowed to be imported when not available locally or for export production. STEEL The iron and steel industry, prized as a ‘basic’ industry by newly industrializing countries for providing crucial input into all forms of industrial development, is a mature, capital-intensive industry. Process technology for manufacturing basic steel is well diﬀused and can be readily imported on an arm’s length basis in the form of engineering services and equipment (Lall, 1987). While the technology of iron and steel manufacture are embodied in capital equipment, the nature of the process necessitates complex engineering. The process of iron and steel manufacture is semi-continuous with diﬀerent levels of production, raw material preparation, iron smelting, steelmaking, and...
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