Cabinet approves PLI Scheme for Specialty Steel; to give Incentives worth Rs 6,322 crores
New Delhi, July 22, 2021
The Union Cabinet today approved the Production Linked Incentive (PLI) Scheme for specialty steel with a budgetary outlay of Rs 6,322 crore over a five-year period from 2023-24 to 2027-28.
The scheme is expected to bring in an investment of approximately Rs 40,000 crores and capacity addition of 25 MT for specialty steel, an official press release said.
The scheme will give employment to about 5,25,000 people of which 68,000 will be direct employment, it said.
According to the release, 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 and specialty steel was produced in the country.
Of the 6.7 million tonnes of imports in the same year, approximately 4 million tonnes were of specialty steel alone, resulting in a foreign exchange outgo of approximately Rs 30,000 crore.
By becoming self-sufficient in producing specialty steel, India will move up the steel value chain and come at par with advanced steelmaking countries like Korea and Japan, the release said.
"It is expected that the specialty steel production will touch 42 million tonnes by the end of 2026-27. This will ensure that approximately Rs 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 reach around 5.5 million tonnes as against the current 1.7 million tonnes.
"The benefit of this scheme will accrue to both big players i.e. integrated steel plants and the smaller players (secondary steel players)," the release said.
Specialty steel is value-added steel where 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 and power, apart from the automobile sector, specialized capital goods, and so on.
The five categories of specialty steel 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) which are currently manufactured in very limited quantity or not manufactured at all.
There are three 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 specialty steel 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.