Union Cabinet approves Rs 6,322 crore PLI scheme for special steel
The Union Cabinet on Thursday approved a Rs 6,322-crore Production-Linked Incentive (PLI) scheme for special steel, which is expected to attract additional investment of around Rs 40,000 crore and capacity addition of 25 million tonnes in the segment.
According to a government statement, the scheme will provide employment to around 525,000 people, out of which 68,000 will be direct employment.
Specialty steel has been selected as the target segment by the government as out of 102 million tonnes of steel produced in 2020-21, only 18 million tonnes of value added steel/specialty steel was produced in the country. Further, out of 6.7 million tonnes of imports in the same year, about four million tonnes were of special steel, resulting in foreign exchange expenditure of about Rs 30,000 crore as per government estimates.
There are five categories of specialty steel selected in the PLI scheme: coated/plated steel products, high strength/wear resistant steel, special rail, alloy steel products and steel wire, electrical steel.
Specialty steel can be used in various strategic applications like defence, space, power, automobile sector, special capital goods etc.
There are three slabs of PLI incentive, the lowest being four per cent and the highest being 12 per cent, provided for Vidyut Steel (CRGO). The duration of the scheme will be five years from 2023-24 to 2027-28.
Dilip Oommen, President, Indian Steel Association and CEO, ArcelorMittal Nippon Steel India (AM/NS India), said this will help bring the country on par with the best in the industry globally.
The steel sector is on an upswing and major integrated producers have drawn up major expansion plans; The PLI scheme is expected to give a further boost to those schemes.
TV Narendran, Managing Director and CEO, Tata Steel said, “Committed to nation building, Tata Steel has been a leader in import substitution, especially in the auto sector.
“As we continue our journey of growth, the PLI scheme will provide an added advantage to our future plans where there will be a major focus on value-added products.”
AM/NS India Chief Marketing Officer Ranjan Dhar said the scheme will encourage investment from AM/NS in the automotive segment such as very high grade steel and coated steel for solar applications.
“Value added steel will be a major focus area for the company. All this will benefit our customers in India and abroad,” he said.
Soma Mandal, Chairman, Steel Authority of India Limited (SAIL) said that this important decision to introduce PLI for Special Steel will have far-reaching positive impact on the domestic steel industry and SAIL in particular.
We will consider this plan while deciding on our next capital expenditure cycle and product-mix in the times to come, he added.
JSPL Managing Director VR Sharma also said that the company will definitely register for the scheme.
“Most of the imports in India are in the value added and specialty segment. The PLI scheme will boost manufacturing capacity by Indian mills in this segment and MSMEs will be able to source directly from them,” he said.
The government expects the benefits of this scheme to increase to 42 million tonnes by the end of 2026-27 in the form of special steel production to both integrated steel plants and small players (secondary steel players).
“This will ensure that around Rs 2.5 trillion worth of special steel will be produced and consumed in the country which would have been imported otherwise. Similarly, export of specialty steel will be around 5.5 million tonnes, while the existing 17 lakh tonnes of specialty steel is getting foreign exchange of Rs 33,000 crore,” the government statement said.