The Indian government is gearing up for the launch of the Production Linked Incentive (PLI) scheme 2.0 for the steel sector in 2024, as confirmed by the Minister of State for Steel, Faggan Singh Kulaste. This initiative is part of the government’s broader strategy to bolster the steel industry, a crucial sector for the nation’s economy.
One of the primary objectives of PLI scheme 2.0 is to ensure a steady supply of raw materials for the steel industry, with a particular focus on promoting the use of scrap. The scheme also aims to encourage the adoption of artificial intelligence and new-age technologies among industry players to enhance steel output while focusing on reducing carbon emissions.
The steel sector in India has shown impressive growth in the recent period. For instance, between April and November this year, the country witnessed a 14.5% year-over-year increase in crude steel production, reaching 94.01 million tons. Similarly, the consumption of finished steel also rose by 14% to 86.97 million tons. These figures underscore the robust demand and production capabilities within the Indian steel industry.
However, the industry faces challenges, particularly concerning imports. The Indian Steel Association (ISA) has expressed concerns about the increasing imports and high raw material prices, which are impacting the domestic market. Notably, India remains highly reliant on imports for its coking coal needs, meeting about 90% of its requirement through imports. In 2023, the imports ranged between 70-80 million tons.
Amidst these concerns, CRISIL, a ratings agency, predicts that strong domestic demand, driven by government spending on infrastructure, building, and construction segments, will keep India’s steel imports around six million tons this fiscal year.
Looking ahead, the government’s focus is not just limited to addressing current challenges but also on ensuring the long-term growth and sustainability of the steel sector. This includes exploring alternate options for sourcing coking coal and engaging with various countries for this purpose. Additionally, the government is committed to assisting steel players in increasing their capacities and simplifying business processes, including clearances for projects.
In the broader perspective, the Indian steel industry, represented by major players like Tata Steel, ArcelorMittal Nippon Steel India, and JSW Steel, is optimistic about the future. They anticipate continued growth driven by robust economic development, infrastructure projects, and the country’s overarching goal of becoming self-reliant (‘Aatmanirbhar Bharat’). Furthermore, the sector is expected to contribute significantly to India’s aim of doubling its steel production capacity to 300 MT by 2030.
In summary, the PLI 2.0 scheme for the steel sector is a strategic move by the Indian government, addressing both immediate challenges and long-term goals. It reflects the government’s commitment to bolstering a key industry while navigating through global uncertainties and domestic demands.