GoI Signs MoUs with 27 Steel Makers under 6,322 Cr. Specialty Steel PLI Scheme
Government of India (GoI) signed 57 Memoranda of Understanding (MoUs) with 27 Steel companies under the Production-Linked Incentive (PLI) scheme for Specialty Steel on 17th March 2023.
This scheme has been planned with an outlay of Rs. 6,322 crore.
PLI Scheme Envisages Manufacturing Capacity Addition of 25 MMTPA in 5 Years
GoI’s PLI scheme targets to add 25 MMTPA of speciality steel manufacturing capacity in the coming 5 years. In FY-22, the speciality steel manufacturing capacity of the country was about 18 Million Metric Tonne Per Annum (MMTPA). Therefore, with this scheme, the Indian Government targets to build a capacity of around 42 MMTPA in this segment.
Five Categories of Specialty Steel, 20 Sub-Categories Targeted Under the PLI Scheme
The Steel sector PLI scheme targets increasing the production of speciality steel under five product categories, namely high strength/wear-resistant steel, speciality rails, electrical steel, alloy steel products & steel wires, and coated/plated steel products.
These five product categories have been further divided into twenty sub-categories.
The products mentioned under these categories will be used in applications such as high-speed railway lines, white goods manufacturing, automobile body manufacturing, boilers, turbine components, transformer components, and more.
Incentive Outlay for the Speciality Steel PLI Scheme
Year-Wise Disbursement of Incentives
In a Gazette notification dated 29th July 2021, the Government mentioned expected yearly outlay of financial assistance under this PLI scheme. Disbursal period under the scheme will commence from FY-24, and will last till FY-30.
Out of the total amount of Rs. 6,322 crore, Rs. 775 crore would be released during the 2023-24 financial year. Following this, a sum of Rs. 1,088 crore has been sanctioned for FY-25, while Rs. 1,394 crore and Rs. 1,377 crore have been earmarked for FY-26 and FY-27 respectively. For FY-28, an amount of Rs. 1,293 crore will be released under this PLI scheme. Further sums of Rs. 222 crore and Rs. 173 crore have been reserved for FY-29 and FY-30.
Product Category-Wise Allocation of PLI Scheme Incentives
Out of the total amount, Rs. 1,920 crore has been reserved as incentives for the production of high strength/wear-resistant steel, Rs. 209 crore has been earmarked for the manufacture of specialty rails, and Rs. 809 crore will be given as incentives for electrical steel production. Production of alloy steel products & steel wires will be incentivised by Rs. 852 crore out of the PLI amount, while Rs. 2,505 crore has been allocated to incentivise coated/plated steel product manufacturing. Apart from this, Rs. 27 crore will be used towards administrative costs.
Scheme to Promote Manufacturing of High-Value Steel, Reduce Imports
As of now, the speciality Steel products manufactured in India have an average value of Rs. 51,000 to Rs. 58,000 per tonne. Contrastingly, speciality Steel products which are imported by the country have an average value of Rs. 1,46,000 to Rs. 1,83,000 per tonne. The aforementioned PLI scheme aims at enhancing the production of higher-end speciality steel products, thereby reducing dependence on imports.
Talking about potential investments, Mr. Jyotiraditya Scindia, the Union Minister for Steel, stated during the signing of the aforementioned MoUs that the speciality Steel PLI scheme is expected to generate Rs. 30,000 crore worth of investments in the sector.