The government of India has launched a Production Linked Incentive (PLI) scheme for specialty steel in October 2021, with an outlay of Rs 6,322 crore over five years. The scheme aims to promote the production and export of high-grade steel products that have higher value addition and lower import dependence.
Overview of the PLI scheme for specialty steel
According to the Ministry of Steel, the PLI scheme for specialty steel has received a positive response from the industry, with 67 applications from 30 companies being selected under the scheme. These companies have committed to invest about Rs 40,000 crore and add a capacity of 25 million tonnes (MT) for producing specialty steel grades. Out of this, Rs 12,900 crore have already been invested by the selected companies as of December 2023.
The PLI scheme for specialty steel covers five categories of products: coated/plated steel products, high strength/wear resistant steel, specialty rails, alloy steel products and steel wires, and electrical steel. These products are used in various sectors such as automotive, railways, defence, machinery and equipment, and power transmission and distribution.
The PLI scheme for specialty steel offers a graded incentive ranging from 4 percent to 12 percent on incremental sales (over the base year of 2019-20) of eligible products manufactured in India. The incentive is subject to meeting certain quality standards and thresholds of domestic value addition. The scheme is expected to boost the production of specialty steel in India from 18 MT in 2020-21 to 42 MT by 2026-27.
Benefits of the PLI scheme for specialty steel
The PLI scheme for specialty steel is also expected to increase the exports of specialty steel from India from about 5.5 MT in 2020-21 to 19 MT by 2026-27. This will help India become a global player in the specialty steel market, which is estimated to grow at a compound annual growth rate (CAGR) of 5.2 percent from 2019 to 2027. The scheme will also generate direct and indirect employment opportunities for about 5.25 lakh people.
The PLI scheme for specialty steel will also have positive spillover effects on other sectors such as mining, logistics, power, and engineering. It will also enhance the competitiveness of the Indian steel industry and reduce its dependence on imports of high-value steel products. Moreover, it will support the government’s vision of Atmanirbhar Bharat and Make in India initiatives.
Challenges and opportunities for the scheme for specialty steel
The PLI scheme for specialty steel faces some challenges such as availability and affordability of raw materials, land acquisition, environmental clearance, skilled manpower, technology upgradation, and market access. These challenges need to be addressed by the government and the industry through policy interventions, infrastructure development, capacity building, innovation, and collaboration.
However, the PLI scheme for specialty steel
also offers several opportunities for the industry to leverage its strengths and tap into new markets. Some of these opportunities are:
- Increasing demand for specialty steel products from emerging sectors such as electric vehicles, renewable energy, smart cities, railways modernization, defense manufacturing, and aerospace.
- Growing preference for green and sustainable products that have lower carbon footprint and higher recyclability.
- Diversifying the product portfolio and enhancing the value addition by developing new grades and applications of specialty steel.
- Exploring new export destinations such as Africa, Middle East, Latin America, and Southeast Asia that have high potential for infrastructure development and industrialization.
- Collaborating with research institutions and academia to develop cutting-edge technologies and innovations in specialty steel production.
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