The Union Cabinet on Thursday approved Rs 6,322 crore production-linked incentive (PLI) scheme for speciality steel in a move that is expected to attract an additional investment of about Rs 40,000 crore and capacity addition of 25 million tonnes in the segment.
According to a government statement, the scheme will give employment to about 525,000 people of which 68,000 will be direct employment.
Speciality steel has been chosen as the target segment by the government because out of a production of 102 million tonnes of steel in 2020-21, only 18 million tonnes of value-added steel/speciality steel were produced in the country. Moreover, of 6.7 million tonnes of imports in the same year, approximately four million tonnes were of speciality steel, resulting in forex outgo of approximately Rs 30,000 crore, as per government estimates.
The five categories of specialty steel which have been chosen in the PLI Scheme are: coated/plated steel products, high strength/wear resistant steel, speciality rails, alloy steel products and steel wires, electrical steel.
Speciality steel can be used in various strategic applications like defence, space, power, automobile sector, specialised capital goods, among others.
There are three slabs of PLI incentives, the lowest being four per cent and highest being 12 per cent, which has been provided for electrical steel (CRGO). The duration of the scheme will be five years, from 2023-24 to 2027-28.
Dilip Oommen, president, Indian Steel Association, and chief executive officer, ArcelorMittal Nippon Steel India (AM/NS India), said that it would help bring the country at par with the best in the industry globally.
The steel sector is on an uptrend and major integrated producers have lined up major expansion plans; the PLI scheme is expected to boost those plans further.
Tata Steel managing director and chief executive officer, T V Narendran, said, “Committed to Nation building, 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.”
Ranjan Dhar, chief marketing officer, AM/NS India, said that the scheme will incentivise investments from AM/NS in very high-end steel such as automotive segment and also coated steel for solar applications to name a few.
“Value-added steel will be a major focus area for the company. All this will benefit our customers in India and abroad,” he added.
Soma Mondal, chairman, Steel Authority of India Ltd (SAIL) said that this significant decision to introduce PLI for speciality steel would have far reaching positive impacts on the domestic steel industry in general and SAIL in specific.
“We shall consider the scheme while deciding our next capex cycle and product-mix in the coming times,” she further said.
JSPL managing director, V R Sharma, too, said that the company would “definitely” register for the scheme.
“Most of the imports into India are in the value-added and speciality segment. The PLI scheme will boost manufacturing capacities by Indian mills in this segment and MSMEs will be able to source from them directly,” he added.
The government expects the benefits of the scheme to accrue to both integrated steel plants and smaller players (secondary steel players) as speciality steel production to increase to 42 million tonnes by the end of 2026-27.
“This will ensure that approximately Rs 2.5 trillion worth of speciality 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 government statement said.