Cabinet approves Production Linked Incentive Scheme for speciality steel

The scheme will give employment to about 5,25,000 people of which 68,000 will be direct employment.

Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi, approved the Production Linked Incentive (PLI) Scheme for speciality steel. The duration of the scheme will be five years, from 2023-24 to 2027-28. With a budgetary outlay of ₹6322 crores, the scheme is expected to bring in an investment of approximately ₹40,000 crores and a capacity addition of 25 MT for speciality steel. The scheme will give employment to about 5,25,000 people of which 68,000 will be direct employment.

Speciality steel has been chosen as the target segment because out of the production of 102 million tonnes of steel in India in 2020-21, only18 million tonnes value-added steel/speciality steel was produced in the country. Apart from this out of 6.7 million tonnes of imports in the same year, approx. 4 million tonnes import was of speciality steel alone resulting in FOREX outgo of Approx. Rs. 30,000 crores. By becoming Aatmanirbhar in producing speciality steel, India will move up the steel value chain and come at par with advanced steelmaking countries like Korea and Japan.

It is expected that the speciality steel production will become 42 million tonnes by the end of 2026-27. This will ensure that approximately 2.5 lakh crores worth of speciality steel will be produced and consumed in the country which would otherwise have been imported. Similarly, the export of speciality steel will become around 5.5 million tonnes as against the current 1.7 million tonnes of speciality steel getting FOREX of Rs 33,000 crore.

The benefit of this scheme will accrue to both big players i.e. integrated steel plants and to the smaller players (secondary steel players)

Speciality steel is value-added steel wherein normal finished steel is worked upon by way of coating, plating, heat treatment, etc to convert it into high value-added steel which can be used in various strategic applications like Defence, Space, Power, apart from the automobile sector, specialized capital goods etc.

The five categories of speciality steel that have been chosen in the PLI Scheme are:

Coated/Plated Steel Products

High Strength/Wear-resistant Steel

Specialty Rails

Alloy Steel Products and Steel wires

Electrical Steel

Out of these product categories, it is expected that after completion of the Scheme India will start manufacturing products like

API grade pipes, Head Hardened Rails, electrical steel (needed in transformers and electrical appliances) are currently manufactured in very limited quantity or not manufactured at all.

There are 3 slabs of PLI incentives, the lowest being 4 % and the highest being 12% which has been provided for electrical steel (CRGO). The PLI Scheme for speciality Scheme will ensure that the basic steel used is 'melted and poured within the country which means that raw material (finished steel) used for making speciality steel will be made in India only, thereby ensuring that scheme promotes end to end manufacturing within the country.

(With Inputs from PIB)