New Delhi: Union Minister of Steel and Heavy Industries, H.D. Kumaraswamy, launched the second round of the PLI Scheme for Specialty Steel, termed PLI Scheme 1.1, on 6 January 2025 in the presence of senior officials from the ministry and industry leaders at Vigyan Bhavan, New Delhi.

H.D. Kumaraswamy stated that the Ministry of Steel has introduced PLI Scheme 1.1 for Specialty Steel across five product categories, similar to the existing PLI Scheme, to enable further participation as requested by industry stakeholders for relaxation. The scheme will remain open from 6 January to 31 January 2025. He expressed hope that the industry would actively participate to invest and strengthen Brand India, reduce imports, and position India as a global steel powerhouse. The revisions in the PLI Scheme for Specialty Steel demonstrate the government's commitment to bolstering domestic production, fostering innovation, and reducing imports.

Sandeep Poundrik, Secretary, Ministry of Steel, highlighted that PLI Scheme 1.1 will be implemented during the production period of FY 2025-26 to FY 2029-30. He noted that there were no participants in eight sub-categories during the previous round and hoped for broader participation this time. Industry consultations have led to certain changes aimed at making the scheme more investor-friendly, such as reducing threshold investment and capacity for the CRGO product sub-categories, allowing the carry-forward of excess production to the subsequent year for claiming incentives, and lowering the threshold investment for capacity augmentation mode.

PLI Scheme 1.1 encompasses five product categories: Coated/Plated Steel Products, High Strength/Wear Resistant Steel, Specialty Rails, Alloy Steel Products & Steel Wires, and Electrical Steel. These products are essential across various sectors, from white goods to transformers, automobiles, and other niche areas. The scheme will operate within the originally allocated funds of Rs. 6,322 crore.

Changes to the PLI rules have been made based on industry feedback, with not all companies required to install new mills. Recognising the importance of producing quality steel, energy efficiency, and other process improvements, companies investing in augmenting existing capacities will be eligible to participate. Investments in such cases will be 50% of the threshold specified in Annexure-III to the guidelines uploaded on the web portal launched today by the Minister.

Cold-rolled grain-oriented steel (CRGO) is a high-value steel used in the production of power transformers for HT power distribution. The technology for CRGO is not yet available with Indian steelmakers. Recognising its strategic importance, the Ministry of Steel has engaged stakeholders in regular meetings to boost CRGO production domestically. By reducing the investment and capacity creation thresholds to Rs. 3,000 crore and 50,000 tonnes respectively, the ministry aims to encourage industry participation in this category.

The scheme allows companies to carry forward excess production to the subsequent year for claiming incentives. If a company's production in a given sub-category exceeds its commitment for that year, the excess may be carried forward to offset any shortfall in the next year, ensuring optimal distribution of incentives.

The first round of the PLI Scheme for Specialty Steel was notified on 29 July 2021 with a budgetary outlay of ₹6,322 crore, aimed at promoting the domestic manufacturing of value-added steel grades. This will help the Indian steel industry advance in technology and value chain, reduce imports of these grades, and contribute to the Atma Nirbhar Bharat initiative.

In the first round, 44 projects by 26 companies are active, with a committed investment of about Rs. 27,106 crore and a downstream capacity creation of 24 million tonnes. As of November 2024, the actual investment achieved is around Rs. 18,300 crore, generating direct employment for approximately 8,300 individuals. The Ministry of Steel estimates the payout for participants in the first round will be about Rs. 2,000 crore.

The application window is open from 6 January to 31 January 2025, with investments made after the portal opening date counting towards participation in the scheme.

PLI Scheme for Specialty Steel has brought the importance of self-reliance in the production of specialty steel to the forefront. The country stands to benefit from reduced imports of specialty steel, achieving self-reliance through capacity creation, ensuring investments lead to job creation, and advancing the steel business value chain.

BI Bureau