India Launches PLI Scheme 1.1 for Specialty Steel
On January 6, 2025, the Union Minister of Steel and Heavy Industries, Shri H. D. Kumaraswamy, officially launched the second round of the Production Linked Incentive (PLI) scheme for Specialty Steel, known as PLI Scheme 1.1. The event took place at Vigyan Bhavan in New Delhi, attended by senior officials from the ministry and industry leaders. This initiative aims to bolster India’s steel production capabilities and reduce reliance on imports, positioning the country as a global steel powerhouse.
Objectives of PLI Scheme 1.1
The PLI Scheme 1.1 is designed to encourage investment in five specific product categories of specialty steel. These categories include Coated/Plated Steel Products, High Strength/Wear Resistant Steel, Specialty Rails, Alloy Steel Products, and Electrical Steel. The scheme will remain open for applications from January 6 to January 31, 2025. Minister Kumaraswamy expressed optimism that the industry would actively participate, thereby strengthening Brand India. The government aims to enhance domestic production, foster innovation, and reduce imports through this initiative.
The scheme operates within the original budget of ₹6,322 crore, which was allocated for the first round of the PLI scheme. The first round, launched on July 29, 2021, has already seen significant investment and capacity creation. The government hopes that the new round will attract even more participants, especially in sub-categories that lacked interest in the previous round. By making the scheme more investor-friendly, the Ministry of Steel aims to stimulate growth and innovation in the sector.
Key Changes in the Scheme
Shri Sandeep Poundrik, Secretary of the Ministry of Steel, highlighted several changes made to the PLI Scheme 1.1 based on industry feedback. One significant alteration is the reduction in threshold investment and capacity requirements for certain product sub-categories, particularly Cold-Rolled Grain-Oriented (CRGO) steel. This type of steel is crucial for manufacturing power transformers, yet its production technology is currently unavailable in India. By lowering the investment threshold to ₹3,000 crore and the capacity requirement to 50,000 tonnes, the ministry hopes to encourage more companies to participate.
Additionally, companies can now carry forward excess production to the following year for incentive claims. This flexibility ensures that companies are not penalized for fluctuations in production, allowing them to optimize their incentives. The changes aim to make the scheme more accessible and attractive to a broader range of investors, ultimately enhancing the domestic steel industry.
Expected Impact on the Steel Industry
The PLI Scheme 1.1 is expected to have a significant impact on India’s steel industry. By promoting the production of value-added steel grades, the scheme aims to elevate the country’s manufacturing capabilities and technological advancements. This initiative aligns with the government’s vision of achieving self-reliance, or “Atmanirbharta,” in the steel sector.
The first round of the PLI scheme has already resulted in 44 active projects with a committed investment of approximately ₹27,106 crore. As of November 2024, the actual investment achieved is around ₹18,300 crore, generating direct employment for about 8,300 individuals. The Ministry of Steel estimates that the payout for participants in the first round will be around ₹2,000 crore. The successful implementation of PLI Scheme 1.1 is anticipated to further enhance job creation, reduce imports, and strengthen India’s position in the global steel market.
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