Visakhapatnam: The Union government's decision to disinvest the Visakhapatnam Steel Plant or Rashtriya Ispat Nigam Ltd (VSP/RINL) remains unchanged, as confirmed by the Department of Investment and Public Asset Management (DIPAM).

Responding to a query filed by labour union leader Padi Thrinadha Rao, the finance ministry, under which DIPAM operates, made it explicitly clear that there is "no change" in the government's stand favouring a 100% stake sale of the public sector steel unit. This official confirmation directly contradicts assurances given just months earlier, in July 2024, by Union minister of steel & heavy industries, H.D. Kumaraswamy, who had publicly stated that privatisation was effectively off the table.

The actions and rhetoric of the National Democratic Alliance (NDA) parties, specifically the Telugu Desam Party (TDP) and Jana Sena Party (JSP), have raised eyebrows. Following the Union cabinet's announcement of a Rs 11,440-crore financial package for VSP in February 2025, chief minister N. Chandrababu Naidu confidently declared the privatisation threat to be over. In a press conference, Naidu had said, "With the revival package in place, the problem of steel plant privatisation will no longer exist".

While hailing the package, Naidu emphasised the need for efficiency and responsibility, stating, "This is taxpayers' money, and we need to use it responsibly." Addressing VSP employees, the chief minister urged "everyone" to "work hard and utilise taxpayers' funds efficiently to revive the steel plant". Conspicuously absent from his remarks, however, was any mention of addressing VSP's fundamental and long-standing need for captive iron ore mines – the primary factor hindering its profitability. He had asked the Centre to "immediately appoint a professional management team and bring in a capable CEO to run the plant effectively".

“Naidu is cleverly trying to mislead the public into believing that VSP is unable to make profits because of the ‘laziness of the workers and employees’, deliberately sidestepping the fundamental issue of non-allocation of captive mines. It’s a disingenuous and tedious argument often used to justify privatisation in this country,” Communist Party of India (Marxist) (CPI(M)) leader Ch Narsingha Rao told The Wire.

Also read: Vizag Steel Plant: Modi's Rs 11,440-Crore Package Raises More Questions Than Answers

When asked if the Centre’s policy regarding VSP's privatisation remains unchanged, what purpose does the Rs 11,440-crore financial package serve, Rao explained: “I believe this package serves two purposes. First, it allows the NDA to create the impression they are acting to save the plant, even though the Centre knows that allocating captive mines is the fundamental issue. Considering Naidu’s spin, they might drag this for another year, then claim that despite the package, VSP failed to turn profitable, thus justifying an immediate strategic sale as the plant is 'sick'."

He continued, outlining the potential second purpose: "Why would any private player buy a loss-making steel plant deemed 'sick'? This suggests the Rs 11,440-crore package might be intended to ‘ready’ the distressed VSP for a private buyer, perhaps by settling some immediate dues or making it slightly more attractive for acquisition.”

The state leadership's apparent lack of advocacy for captive mines for VSP is sharply contrasted by the alacrity with which the government is facilitating a massive new private steel plant by ArcelorMittal Nippon Steel India (AMNS India) just 60 km away at Nakkapalli. The Andhra Pradesh cabinet swiftly approved the Rs 1.35 lakh-crore AMNS project proposal.

Moreover, chief minister Naidu reportedly requested Prime Minister Narendra Modi directly for central assistance specifically for raw material supply and expediting clearances for the private AMNS plant – a proactive approach notably absent regarding VSP's needs. This preferential treatment extends to granting AMNS invaluable public resources, including approval for a dedicated captive port facility along a 2.9 km stretch of coastline at D.L. Puram.

This dual approach – promoting a financial package for VSP as a revival measure while ignoring its core requirement for captive mines, and simultaneously extending support to a private competitor – fuels accusations of duplicity. Critics argue that this strategy aims to maintain public support while ultimately aligning with the Centre's confirmed privatisation agenda for VSP.

Speaking to The Wire, E.A.S. Sarma, former secretary to the government of India, highlighted VSP's core problem and the package's inadequacy. "The absence of a dedicated, nearby source of quality iron ore is the root cause of VSP's financial woes. The Union ministry of mines has obstinately refused this for years, while readily allocating multiple blocks to private players. Any revival plan that ignores this fundamental aspect is meaningless." 

He added, "The announced Rs 11,440-crore [package] while welcome as temporary relief, is woefully insufficient. VSP's liabilities exceed Rs 35,000 crore. This package doesn't make the plant debt-free, nor does it address the raw material cost issue. It merely postpones the inevitable unless the core problem of captive mines is resolved."

Sarma also drew a comparison with the Centre's priorities elsewhere.

"The Union finance ministry didn't hesitate to provide Rs 13,000-crore in PLI subsidies to a profitable US company like Micron for a semiconductor plant in Gujarat, yet it resists a comprehensive solution for a strategic national asset like RINL."

He pointed to the state's facilitation of AMNS as further evidence of skewed priorities. "Facilitating AMNS with prime coastal land for a captive port, while VSP lacks such facilities and is starved of captive mines, demonstrates a clear bias. This private port not only aids a direct competitor, eroding VSP's market base, but also threatens the financial viability of the public sector Visakhapatnam Port Trust (VPT)."

Also read: Vizag Steel: A People’s Steel Plant and the Struggle Against Privatisation

The potential ecological and social costs of the AMNS project, particularly the allocation of the D.L. Puram waterfront, also raise concerns, Sarma warned. He noted the risk of unfairly excluding traditional fishing communities and potential pollution impacts, questioning the legality and propriety of granting public resources to a private entity, especially one with a controversial international track record like AMNS's plant closures in South Africa.

Moreover, the viable alternative of merging the struggling RINL with the profitable, mine-rich Steel Authority of India Limited (SAIL) – a solution proposed by employee federations (Structural Engineering Forum of India, Steel Executives’ Association, National Confederation of Officers’ Association) and experts like Sarma – was swiftly rejected by the government. The minister of state for steel cited SAIL's reluctance to take on VSP's debt, which is largely attributable to the very lack of captive mines that SAIL possesses, highlights a circular and self-defeating logic.

The official confirmation of the unchanged privatisation policy for Vizag Steel, juxtaposed against political rhetoric and preferential treatment for private competitors, leaves the future of the public sector giant deeply uncertain. Without addressing the critical need for captive mines, the recent financial package appears less like a genuine revival effort and more like a controversial step in a predetermined path towards disinvestment.

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