India Launches PLI 1.2 Scheme for Speciality Steel to Boost Domestic Production

The Indian government, through the Ministry of Steel, has initiated the third phase, 'PLI 1.2', of its Production Linked Incentive Scheme specifically for speciality steel. Launched by Steel Minister HD Kumaraswamy, the scheme's primary objective is to bolster domestic manufacturing capabilities, transform India into a global leader in high-value and advanced steel production, and significantly curb import dependency. The Union Cabinet had initially approved this scheme in July 2021 with a total budget of ₹6,322 crore. It works by providing financial incentives based on incremental production and investment in specific steel product categories, thereby promoting value addition within India. These critical sectors include defence, power, aerospace, and infrastructure, which rely heavily on advanced steel grades. The scheme has already demonstrated success in its previous rounds, attracting a committed investment of ₹43,874 crore, with ₹22,973 crore already disbursed. It has also been instrumental in creating over 13,000 jobs.

The scheme encompasses 22 diverse product sub-categories, such as super alloys, Cold Rolled Grain Oriented (CRGO) steel, alloy forgings, stainless steel (both long and flat products), titanium alloys, and coated steels. The incentive rates vary between 4% and 15%, applicable for a period of five years, commencing from the 2025-26 financial year, with incentive disbursals set to begin in the next fiscal. To ensure relevance, the base year for pricing calculations has been updated to 2024-25, reflecting contemporary market trends.

Impact: This initiative is expected to significantly boost the speciality steel sector in India. By incentivizing production and investment, it will drive technological advancements, enhance competitiveness, and create substantial employment opportunities. It will also improve the availability of critical steel products domestically, supporting key infrastructure and defense projects and reducing foreign exchange outflow. The scheme's focus on high-value products will elevate India's position in the global steel market. Impact Rating: 8/10

Difficult Terms Explained: Production Linked Incentive (PLI) Scheme: A government scheme that provides financial incentives to companies based on their incremental production of eligible goods and services. It aims to boost domestic manufacturing and exports. Speciality Steel: Steel with specific properties tailored for particular applications, often involving complex alloys and advanced manufacturing processes, used in high-tech industries. Super Alloys: High-performance metal alloys that can withstand extreme temperatures, pressures, and corrosive environments, often used in aerospace and power generation. CRGO (Cold Rolled Grain Oriented): A type of electrical steel used in the cores of transformers due to its specific magnetic properties. Alloy Forgings: Metal parts shaped by heating and hammering or pressing them into a desired form, made from alloys for enhanced strength and durability. Incremental Production: The increase in output over a specific baseline period, used as a metric to calculate incentives under PLI schemes. Value Addition: The process of increasing the worth of a product or service through manufacturing, processing, or packaging.