Naidu's alacrity in helping Mittal set up new steel plant raises much ire

Andhra Pradesh Chief Minister N Chandrababu Naidu’s penchant for industrialisation is known. But the speed with which he has worked to birth a private steel plant in the state has come under widespread criticism.

On November 19, 2024, the Andhra Pradesh State Industrial Promotion Board (SIPB) approved a proposal of ArcelorMittal and Nippon Steel India (AM/NS India) to set up an integrated steel plant with an initial investment of Rs 61,780 crore at Nakkapalli in Anakapalli district, close to the coastline.

The very next day, the state cabinet, chaired by Naidu, ratified the proposal. Next week, the government asked the officials to acquire land for the plant under a Land Pooling Scheme (LPS).

According to Andhra Pradesh IT and Industry Minister Nara Lokesh, who is also Naidu's son, the Mittal deal was clinched in a Zoom meeting.

A lot on offer

On December 25, Naidu called on Prime Minister Narendra Modi and sought the Centre's assistance in the supply of raw material and early clearances for the Mittal plant. Modi is expected to lay the foundation stone for the plant on January 8.

The state government has decided to extend concessions like tax waivers for 15 years, and concessional rates for registration fee, stamp duty and water supply from the Yeleru project.

Informed sources told The Federal the state will also provide road and rail connectivity in the plant area. Further, it has agreed to pay an honorarium of Rs 6,500 per month per head to AM/NS India plant employees for five years under a skill development programme.

Naidu under attack

The alacrity with which the decisions were taken has been been widely criticised. One major criticism is that Naidu ignored JSW Steel's proposed plant in Kadapa, in Andhra Pradesh's Rayalaseema region, in favour of Mittal’s plant.

The construction of a 3 million tonnes per annum (MTPA) integrated steel plant in Kadapa district (Kadapa Steel Plant) has shown near-zero progress. The main issues are supply of iron ore and creation of external infrastructure.

Also, coming up just 60 km from Visakhapatnam, the Mittal plant is also seen as a threat to Rashtriya Ispat Nigam Ltd's (RINL) Vizag Steel Plant, which the Centre intends to privatise.

Adding fuel to the fire in Andhra Pradesh is the recent release of Central funding of Rs 15,000 crore to the Visvesvaraya Iron and Steel Ltd (VISL) plant at Bhadravati in Congress-ruled Karnataka.

Kadapa Steel Plant

Between 2014 and 2023, both Naidu’s Telugu Desam Party (TDP) and YS Jagan mohan Reddy’s YSR Congress vied with each other to set up a steel plant in Kadapa district. In 2018, TDP MPs staged a protest in New Delhi against what they called the Centre’s apathy towards the proposal.

Naidu, who was the Chief Minister then too, though not a part of the NDA, called for a fight to establish Kadapa Steel Plant, drawing inspiration from the slogan Visakha Ukku Andhrula Hakku ('Visakha Steel, the right of Andhras'), the battle cry of the movement for Vizag Steel Plant in the 1960s.

He vowed that the state would establish the plant by itself if the Centre fails to honour its promise. To show his commitment, Naidu laid the foundation stone for the plant in December 2018. But he lost power in 2019 to the YSR Congress.

Later, Jagan, to outwit Naidu, performed a bhoomi puja for the JSW Kadapa Steel Plant in February 2023 at a different location. Beyond that nothing has happened.

Congress attacks Modi, Naidu

Now, instead of pursuing Kadapa Steel Plant, Naidu is going the extra mile to promote Mittal’s plant.

The YSR Congress, which suffered a humiliating defeat in the 2024 Assembly elections, has been silent. The Congress, the Left parties and some others are questioning the wisdom behind allowing Mittal’s plant to come up near Vizag Steel Plant, which was denied a Central relief package.

Andhra Pradesh Congress president YS Sharmila strongly criticised Modi and Naidu over their 'attitude' towards Vizag Steel. “Both governments (Centre and state) are doing injustice to a plant which employs over 20,000 people. Both have ignored Vizag Steel. Is it fair?” she asked.

She urged Modi and Naidu not to 'kill' Vizag Steel, which was opened 'after sacrificing many lives' in the 1960s.

Left, activists target Naidu

The CPI(M) said while it is not against Mittal's plant, it does want more resources allocated for Vizag Steel Plant.

“We are not against Mittal’s plant in the state. The government should have taken Mittal to Kadapa to set up the plant as the Chief Minister himself vowed to establish a steel plant," V Srinivasa Rao, Secretary of the state CPI(M), told The Federal.

"Now, allowing Mittal’s plant to come up near Vizag Steel and extending exemptions generously to the plant makes one suspicious of intentions,” he added.

Overshadowing Vizag Steel

B Gangarao, a political analyst and a corporator from Visakhapatnam, told The Federal that Mittal’s plant may further diminish the revival chances of Vizag Steel and make the privatisation imminent.

“Instead of fighting for captive mines (for iron ore supplies) for Vizag Steel, which employs nearly 20,000 workers, Naidu looks more worried about raw material supply to Mittal’s plant," he told The Federal.

"He has urged the Centre to make available an adequate number of rail wagons for ore supply to Mittal plant. Mittal has already built a pipeline for the supply of ore to its pellet plant in Visakhapatnam. Now, they want rail wagons as well to reinforce the ore supply.

"All these steps will affect the ore supply to Vizag Steel Plant from Bailadilla mines and force the PSU giant to depend on Karnataka ore, which adds up the financial burden on the plant. Against this backdrop, you cannot rule out a time when ArcelorMittal comes forward to buy Vizag Steel,” Gangarao said.

Gangarao said not once in the past six months did Naidu or Deputy Chief Minister Pawan Kalyan, or any MP, demand that the Centre extend financial support to the ailing Vizag Steel Plant.

Former IAS officer's queries

Former Central government secretary EAS Sarma also wondered why a Chief Minister should take such keen interest in ensuring uninterrupted ore supply for a private plant when a PSU in the neighbourhood badly needs it.

Talking about the land pooling system, the former IAS officer told The Federal: “The state government is trying to bypass the Land Acquisition, Rehabilitation and Resettlement Act, 2013, in favour of a questionable land pooling scheme. The scheme is prima facie illegal.”

Recalling how Naidu and Pawan Kalyan promised to get a revival package for Vizag Steel Plant during the election campaign, CPI leader JV Satyanarayana said both leaders are now trying to divert the people’s attention by highlighting the Mittal plant and jobs.

Rayalaseema activist Bojja Dasaratha Ramireddy said Naidu had never genuinely stood for either Rayalaseema or RINL. “The foundation stone he laid for the Kadapa steel plant and his promise to save RINL from being privatised are only public postures. His love for Mittal is the end of the road for RINL and Kadapa steel,” Ramireddy, president of the Rayalaseema Saagu Neeti Sadhana Samiti, told The Federal.