CHENNAI: The Union Cabinet on Thursday gave its go-ahead to a Rs 6,322-crore production linked incentive (PLI) scheme to boost the manufacturing of specialty steel. While India is a major steel producer, churning out 102 million tonnes of steel in fiscal year 2020-21 (FY21), less than 18% (18 million tonnes) is of value-added, or specialty steel.
According to the Union Ministry of Steel, the incentive scheme is expected to bring in an investment of approximately Rs 40,000 crore and a specialty steel capacity addition of 25 million tonnes. “The scheme will (also) give employment to about 5,25,000 people, of which 68,000 will be direct employment,” it added in a statement.
Union Minister for Information and Broadcasting Anurag Thakur said during the media briefing that the scheme would also “boost manufacturing and help in reducing imports”. Similar to the other recently announced PLI schemes for other sectors, this scheme shall also be effective for five years-from 2023-24 to 2027-28. It will cover facilities making coated/plated steel products, high strength/wear resistant steel, specialty rails, alloy steel products, steel wires, and electrical steel.
These value-added steel is used in making of white goods, automobile body parts and components, pipes for transportation of oil and gas, boilers, ballistic and armour sheets meant for defence application, high-speed railway lines, turbine components, electrical steel meant for power transformers, and electric vehicles.
Since specialty steel manufacturing has remained low in India, imports have reigned high. “Out of 6.7 million tonnes of imports in 2020-21, around 4 million tonnes of imports was of specialty steel alone, resulting in a forex outgo of approximately Rs 30,000 crore,” the ministry said.
This, the government notes, is because the Indian steel industry is hobbled by extra costs of $80-100 per tonne, “on account of higher logistics and infra cost, higher power and capital cost and, taxes and duties.” The PLI scheme will address this gap.
According to officials, the scheme will give eligible manufacturers between 4-12% incentive on incremental production. Any company registered in India and engaged in manufacturing the identified ‘specialty steel’ grades will be eligible. However, “the company has to ensure that the steel used for making ‘specialty steel’ is ‘melted and poured’ in the country, thereby ensuring end-to-end (local) manufacturing,” the ministry said.
Steel deal
Rs 40000 crore The estimated investment the scheme is expected to bring
25 million tonnes Expected capacity addition in specialty steel output
5.25 lakh Total employment likely to be generated
68,000 The projected number of direct employment