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Cabinet approves PLI scheme for specialty steel, industry welcomes

Union Cabinet has approved the production linked incentive (PLI) scheme for specialty steel which will attract an investment of about Rs 40,000 crore, steel industry has welcomed the announcement
Steel industry has welcomed Cabinet's decision of approving PLI scheme for specialty steel
Steel industry has welcomed Cabinet's decision of approving PLI scheme for specialty steel

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

Specialty steel has been chosen as the target segment because out of the production of 102 million tonnes of steel in India in 2020-21, only 18 million tonnes of value-added steel/specialty steel was produced in the country. Apart from this,  approx. 4 million tonnes import out of 6.7 million tonnes of total imports in the same year, was of specialty steel alone. That resulted in FOREX outgo of approx. Rs. 30,000 crores. By becoming Aatmanirbhar in producing specialty steel, India will move up the steel value chain and come at par with advanced steel-making countries like Korea and Japan.

The steel industry has welcomed the announcement of PLI scheme for specialty steel. Tata Steel CEO and MD T V Narendran said, "We welcome the PLI scheme for specialty steel announced by the government. Tata Steel has been a pioneer in import substitution, especially in the auto sector. As we continue on our journey of growth, the PLI scheme will provide an added advantage to our future plans where value-added products will be a major focus."

"We shall consider the scheme while deciding our next CAPEX cycle and product-mix in the coming times. The PLI scheme for specialty steels will encourage new technological interventions and innovations in the domestic steel sector. SAIL is expected to capitalize on the opportunity and contribute to the Government's efforts in making a strong and self-reliant India," said SAIL Chairman Soma Mandal.

DK Mohanty, CMD (additional charge), RINL, said, "The PLI scheme approved by the Union Cabinet is a welcome step toward making India a truly ''Aatmanirbhar Bharat'' as it will have multiple cascading positive effects. It will not only promote the production of quality specialty steel for import substitution for the end-users but also provide an opportunity for the producers to export finished products for long-term sustainability."

Jindal Steel and Power Ltd (JSPL) Managing Director VR Sharma said it is a step in the right direction to make India Aatmanirbhar in specialty steel which is being imported from other countries. Sharma said bankers will now have a positive outlook towards the steel industry as the PLI announcement has given a clear message that the steel sector has the support of the government.

"The scheme will give an edge to set up of domestic manufacturing facilities for specialty steel in the country and give a fillip to investment in research and development (R&D) and technology in the sector", said Seshagiri Rao, JSW Steel Joint Managing Director, and Group CFO. "Also, the stipulation in the scheme that the steel used for making specialty steel should be melted and poured in the country” will strengthen end-to-end manufacturing within the country, Rao added.

Chandrajit Banerjee, Director General of industry body CII, said "the scheme for specialty steel announced today shows the government's commitment towards Aatmanirbhar Bharat.

 

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

Specialty 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.

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

  1. Coated/Plated Steel Products
  2. High Strength/Wear-resistant Steel
  3. Specialty Rails
  4. Alloy Steel Products and Steel wires
  5. 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) which are currently manufactured in very limited quantity or not manufactured at all.

There are 3 slabs of PLI incentives. The lowest is 4 % and the highest is 12%, which has been provided for electrical steel (CRGO). The PLI Scheme for specialty 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 specialty steel will be made in India only, thereby ensuring that the scheme promotes an end to end manufacturing within the country.

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