Centre launches PLI scheme 1.1 to boost production of high-value specialty steel

New Delhi, Jan 26 Union Minister of Steel and Heavy Industries H. D. Kumaraswamy launched the second round of the PLI scheme on Monday to boost the production of high-value specialty steel in the country, which is used for making products such as refrigerators, power equipment, and automobiles.

Kumaraswamy said that the Ministry of Steel has come out with PLI scheme 1.1 for specialty steel for five product categories which is the same as the existing PLI Scheme to enable further participation as industry participants requested the ministry for relaxation.

The minister said that the PLI Scheme 1.1 will remain open from January 6 to January 31, 2025, and expressed hope that the industry will participate actively to invest and strengthen Brand India, reduce imports, and position India as a global steel powerhouse.

The changes made in the PLI scheme for specialty steel reflect the government’s commitment to strengthening domestic production, fostering innovation, and reducing imports, the minister said.

Sandeep Poundrik, Secretary, Ministry of Steel, said that the PLI scheme 1.1 will be implemented during the production period of FY 2025-26 to FY 2029-30. He mentioned that there were no participants in 8 sub-categories in the previous round and hoped there would be wider participation this time around.

Certain changes have been incorporated with industry consultation to make the scheme more investor friendly, which includes a reduction in threshold investment & capacity for the CRGO product sub-categories, allowing carry forward of excess production to the immediately following year for the purpose of claiming incentives, and reduction in threshold investment under capacity augmentation mode.

PLI Scheme 1.1 covers five product categories in line with the existing PLI Scheme, namely coated/plated steel products, high strength/wear resistant steel, specialty rails, alloy steel products & steel wires and electrical steel. These products have a wide range of applications, from white goods to transformers to automobiles and other niche sectors. The scheme will operate within the funds originally allocated for the scheme, i.e., Rs.6,322 crore.

Changes to PLI rules have been made based on industry feedback. Not all companies would need to install new mills. Recognising the importance of producing quality steel, energy efficiency and other process improvements, companies investing in augmentation of existing capacities will be allowed to participate in the scheme. Investment in such cases will be 50 per cent of the threshold mentioned in the guidelines which have been uploaded on the web portal of the Ministry.

The policy will cover cold-rolled grain-oriented steel (CRGO), a high-value steel used in the production of power transformers used in HT power distribution. The technology to make CRGO is not available with any of the Indian steelmakers. Considering the strategic importance of becoming Aatmanirbhar in CRGO, the Ministry of Steel has been having regular meetings with stakeholders aimed at increasing the production of CRGO within the country. By reducing the investment and capacity creation thresholds to Rs.3,000 crore and 50,000 tonnes respectively, the Ministry of Steel hopes that the industry would be enthused to participate in the category.

The first round of the Production Linked Incentive (PLI) Scheme for Specialty Steel was notified on July 29, 2021, by the Ministry of Steel with a budgetary outlay of Rs 6,322 crore.