On January 6th, 2025, Union Minister of Steel and Heavy Industries, Shri H. D. Kumaraswamy, launched the second round of the Production Linked Incentive (PLI) Scheme for Specialty Steel, named PLI Scheme 1.1. The launch event took place at Vigyan Bhavan, New Delhi, in the presence of senior ministry officials and industry leaders.
Key Features of PLI Scheme 1.1
Shri Kumaraswamy highlighted that PLI Scheme 1.1 would cover five product categories, aligning with the existing PLI Scheme. The categories include:
- Coated / Plated Steel Products
- High Strength / Wear Resistant Steel
- Specialty Rails
- Alloy Steel Products & Steel Wires
- Electrical Steel
The scheme will remain open for applications from January 6th to January 31st, 2025. It aims to promote domestic production, reduce imports, and position India as a global leader in the steel industry.
Industry Participation and Changes to PLI Scheme
The changes in PLI Scheme 1.1 reflect the government’s commitment to fostering innovation and reducing imports. The scheme has been modified based on industry feedback to make it more investor-friendly. Some key changes include:
- Reduction in Threshold Investment and Capacity: For certain products like Cold-Rolled Grain-Oriented Steel (CRGO), the investment threshold has been reduced to Rs. 3,000 crore, and the capacity threshold to 50,000 tonnes.
- Carry Forward of Excess Production: Companies can now carry forward excess production to the following year, allowing them to meet shortfalls and claim incentives accordingly.
Implementation Period and Fund Allocation
The scheme will be implemented during the production period from FY 2025-26 to FY 2029-30, with a budgetary outlay of Rs. 6,322 crore, which was allocated for the original PLI scheme.
Participation in PLI Scheme 1.1
The first round of the PLI scheme for specialty steel, launched in 2021, saw 44 projects by 26 companies, with a committed investment of Rs. 27,106 crore. As of November 2024, actual investments amounted to Rs. 18,300 crore, creating around 8,300 jobs. The payout for the first round participants is estimated to be about Rs. 2,000 crore.
Strategic Importance of CRGO Steel
Cold-Rolled Grain-Oriented Steel (CRGO) is a critical steel product used in the production of power transformers for high-tension power distribution. The technology to manufacture CRGO is not available with Indian steelmakers. The Ministry of Steel has been actively working to increase domestic CRGO production by engaging with stakeholders. The reduced investment and capacity thresholds aim to encourage industry participation in this vital sector.
Objective of PLI Scheme for Specialty Steel
The primary goal of the PLI Scheme is to promote the manufacturing of value-added steel grades within India, which will help the steel industry move up the value chain and reduce imports. This initiative is in line with the government’s vision of Atmanirbhar Bharat (Self-Reliant India), ensuring job creation and strengthening the domestic steel sector.
Multiple-Choice Questions (MCQs):
- What is the primary objective of the PLI Scheme for Specialty Steel?
- a) To promote the manufacturing of low-cost steel
- b) To reduce imports of specialty steel and strengthen domestic production
- c) To increase steel exports to other countries
- d) To subsidize the cost of steel production
- What are the five product categories covered under PLI Scheme 1.1?
- a) Stainless Steel, Alloy Steel, CRGO Steel, Wires, Copper
- b) Coated/Plated Steel Products, High Strength/Wear Resistant Steel, Specialty Rails, Alloy Steel Products & Steel Wires, Electrical Steel
- c) Aluminum Steel, Alloy Steel, Iron, Wires, Copper
- d) Steel, Cement, Wires, Coal, Electrical Steel
- Which steel product is used in the production of power transformers for HT power distribution?
- a) Alloy Steel
- b) Cold-Rolled Grain-Oriented Steel (CRGO)
- c) Stainless Steel
- d) Wear Resistant Steel
- What is the budgetary outlay for the PLI Scheme for Specialty Steel?
- a) Rs. 3,000 crore
- b) Rs. 6,322 crore
- c) Rs. 10,000 crore
- d) Rs. 20,000 crore
- What new provision was introduced in PLI Scheme 1.1 regarding production?
- a) Companies can export excess production
- b) Companies can carry forward excess production to the next year for incentive claims
- c) Companies must produce 100% of their committed capacity
- d) Companies must invest in new mills only