Union Cabinet approves Rs 6,322 crore PLI scheme for speciality steel


The Union Cabinet on Thursday approved Rs 6,322 crore production-linked incentive (PLI) scheme for speciality steel in a move that is expected to draw an extra investment of approximately Rs 40,000 crore and capacity addition of 25 million tonnes in the segment.

According to a government remark, the scheme will give employment to approximately 525,000 people of which 68,000 will be direct employment.

Speciality steel has been chosen as the target segment by the government because out of a production of 102 million tonnes of steel in 2020-21, only 18 million tonnes of value-added steel/speciality steel were produced in the country. In addition, of 6.7 million tonnes of imports in the same year, about four million tonnes were of speciality steel, resulting in forex outgo of about Rs 30,000 crore, as per government estimates.

The five categories of specialty steel that have been chosen in the PLI Scheme are: coated/plated steel products, high strength/wear resistant steel, speciality rails, alloy steel products and steel wires, electrical steel.

Speciality steel can be utilized in quite a lot of strategic applications like defence, space, power, automobile sector, specialised capital goods, among others.

There are three slabs of PLI incentives, the lowest being four per cent and highest being 12 per cent, which has been given for electrical steel (CRGO). The duration of the scheme will be five years, from 2023-24 to 2027-28.

Dilip Oommen, president, Indian Steel Organization, and chief executive officer, ArcelorMittal Nippon Steel India (AM/NS India), said that it would help bring the country at par with the most efficient in the industry globally.

The steel sector is on an uptrend and major integrated producers have lined up major expansion plans; the PLI scheme is expected to spice up those plans further.

Tata Steel managing director and chief executive officer, T V Narendran, said, “Dedicated to Nation building, Tata Steel has been a pioneer in import substitution, particularly in the auto sector.”

“As we continue on our journey of growth, the PLI scheme will supply an added virtue to our future plans where value-added products will be a major focus.”

Ranjan Dhar, chief marketing officer, AM/NS India, said that the scheme will incentivise investments from AM/NS in very high-end steel such as automotive segment and also coated steel for solar applications to name a couple of.

“Value-added steel will be a major focus area for the company. All this will benefit our customers in India and in a foreign country,” he added.

Soma Mondal, chairman, Steel Authority of India Ltd (SAIL) said that this remarkable decision to introduce PLI for speciality steel would have far reaching positive impacts on the domestic steel industry in general and SAIL in particular.

“We will imagine the scheme while deciding our next capex cycle and product-mix in the coming times,” she further said.

JSPL managing director, V R Sharma, too, said that the company would “definitely” register for the scheme.

“Many of the imports into India are in the value-added and speciality segment. The PLI scheme will boost manufacturing capacities by Indian mills in this segment and MSMEs will have the ability to source from them directly,” he added.

The government expects the advantages of the scheme to accrue to both integrated steel plants and smaller players (secondary steel players) as speciality steel production to increase to 42 million tonnes by the end of 2026-27.

“This will make certain that about Rs 2.5 trillion worth of speciality steel will be produced and consumed in the country which would another way have been imported. In a similar fashion, the export of specialty steel will grow to be around 5.5 million tonnes as against the current 1.7 million tonnes of specialty steel getting forex of Rs 33,000 crore,” the government remark said.

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