How Visakhapatnam’s steel was tempered

The dossier, The People’s Steel Plant and the Fight Against Privatisation in Visakhapatnam, published by Tricontinental: Institute for Social Research, details the inspiring struggle of a people for a steel plant, livelihood, and dignity

September 20, 2022 by Aditya Sarin
Visakhapatnam steel plant India
(Photo: Tricontinental: Institute for Social Research)

Since plans for a steel plant in Visakhapatnam in the Indian State of Andhra Pradesh were announced in 1965, the site has been the center of a fierce struggle between the people of the region on one side, and the government and the forces of capital on the other. 

The tale of this inspiring struggle is the focus of the dossier, The People’s Steel Plant and the Fight Against Privatisation in Visakhapatnam, published by Tricontinental: Institute for Social Research.

For the people of Andhra Pradesh, the steel plant represented modern, industrialized employment. This was particularly important because even though Visakhapatnam was an important port, the area around it was very poor. Private industry in the region had been insufficient to alleviate the extreme poverty of the people, mostly those of forest tribes, who struggled with endemic malnutrition and disease.

The construction of state-owned industry was also important because it promised not just the region but also the country a path to self-sufficiency. Steel was needed for the construction of railway lines and irrigation canals, and building the infrastructure required for heavy industry. Steel represented the aspirations of modern, independent India.

This struggle began in 1966, when then Prime Minister Indira Gandhi reversed the decision to construct the plant citing a lack of funds. The people of Andhra Pradesh were determined to fight back, and students took to the streets of Visakhapatnam. They were soon joined by others across the State. The communists supported the agitation, recognizing that industrialization was essential to the creation of an organized working class that could challenge the subjugation of the Indian masses by capital. Chants of Visakha Ukku, Andhrula Hakku (‘Visakha Steel is the Andhra people’s right’) were raised across Andhra Pradesh.

The central government replied by calling in the army, and 32 people died in indiscriminate firing, the youngest of them nine years old. Angered by this, the people only intensified their struggle; protests and hunger strikes multiplied, and district administrations were brought to a halt by rail and road closures. Government departments were prevented from functioning, and members of the state legislative assembly resigned en masse. Finally, the government was forced to bend, and the first pylon of Visakha Steel, as it was affectionately known, was laid in 1971.

Over the next few years, however, the government continued to drag its feet. The pressures of big capital – both domestic and foreign – were exerting themselves strongly by the mid-1980s, hungry for a larger share of India’s wealth. Steel could also be imported at lower prices from international suppliers. Still, unwilling to face the wrath of the people, the government struck a compromise: the plant would be commissioned, but reduced in size. It would also not be granted either the captive iron mine or the port it had been promised.

After time and cost overruns due to delays in the government disbursal of funds for construction over the next several years, Visakha Steel was finally operational in 1992, and already burdened by a debt of Rs 37 billion.

The people’s movement that had led to the foundation of the plant had ensured that the workers were organized and militant, and they, through the Centre of Indian Trade Unions (CITU), articulated certain demands in the initial years of the plant’s functioning. Among these was that the capacity of the steel melt shop be increased. Instead, by 1994, the first steps towards privatization were already in motion, as the government signed an agreement with a private company to set up a steel melt shop within the premises of Visakha Steel. Molten iron would go directly to the private company, which could then sell steel at high profit margins. Visakha Steel would handle the more hazardous parts of the process, but only be able to sell cheaper crude iron.

CITU organized large workshops in response, and the workers staged strikes and work stoppages to stop this privatization by stealth. In 1997, the government was forced to shelve the plan and allowed Visakha Steel to set up its own additional steel melt shops.

Due to the various disadvantages the government had saddled Visakha Steel with, by 1999, its cumulative losses and debts amounted to a sum of Rs 46 billion. This served as an easy excuse for the government to push again for privatization. The central government, headed by the Bharatiya Janata Party (BJP), began looking for buyers, and offered to even forgive the plant’s loans.

The workers took to the streets against the sale of the plant in 2000. Even when the police were called in to brutalize and arrest workers, the protests did not stop. The police violence only increased the profile of the struggle, and, as Andhra Pradesh rallied more strongly to support the workers, the move to privatize the plant was withdrawn.

While the next decade in the plant’s history was relatively easier, this was a pattern that was to be repeated several times over the next two decades as well. Visakha Steel flourished, paid off its debts by 2004, and expanded between 2006 and 2015, but the government continued to try and privatize it, but was forced back repeatedly by the collective will of the people.

The National Monetisation Pipeline (NMP) that was launched during Prime Minister Narendra Modi’s second term, which aims to sell or lease every public asset to private interests by 2025, is the most extreme move so far in the direction of privatization. It is in its spirit that in 2019, the central government proposed that South Korean steel company POSCO set up a rolling mill to produce a particular grade of automotive steel on 3,000 acres belonging to Visakha Steel. 

Workers and organizers understood that this land, already worth a great deal on the open market, would be required for any further expansion of the plant. They also understood that once again, Visakha Steel was being tasked with the more dangerous parts of production so that POSCO could work at the more lucrative end of the production chain, altering the balance of profits and clearing the way for POSCO’s eventual takeover of the plant.

While the focus of the entire nation was on the farmers’ protests as thousands of farmers made their way to the Red Fort on Republic Day, January 26, 2021, the very next day, the government decided on the complete sale of Visakha Steel. This is when Visakha Steel has never defaulted on its loan payments and despite the pandemic’s impact and a lowered demand for steel, made a profit of Rs 9.4 billion in 2021-2022.

The future of Visakha Steel is still unsure, but what is clear is the broad base of support it enjoys from the people. Farmer-worker solidarity has been invaluable in this regard; steel workers supported the farmers’ agitation and understood their struggle, and, in turn, have been themselves supported by farmers. Many of the families that gave up their own land for the construction of the plant continue to fight alongside the workers as well, arguing that selling the land to private corporations would be a betrayal. They continue to push for the creation of more local jobs, and for the plant to remain in public ownership. Trade unions and unionized anganwadi (rural childcare center) workers have also affirmed their support for the plant and have been working tirelessly to spread awareness across the State and collect signatures and support for the plant.

The workers themselves are seasoned campaigners, and the support they have received indicates that they are moving in the right direction. Their struggle will continue because it must.

Link to the full dossier.