The Union Cabinet on Thursday approved the production-linked incentive (PLI) scheme for manufacturing specialty steel in the country with a budgetary outlay of ₹6,322 crore over a period of five years from 2023-24.
The scheme is expected to bring in investments worth about ₹40,000 crore and result in a capacity addition of 25 million tonne (MT) for specialty steel, according to an official statement.
The scheme would generate employment for about 5.25 lakh people, including direct employment for 68,000 people.
“Speciality steel has been chosen as the target segment because out of the production of 102 MT steel in India in 2020-21, only 18 MT value-added steel/specialty steel was produced in the country,” the government said. Additionally, out of 6.7 MT of imports during the said year, about 4 MT was of specialty steel alone resulting in a foreign exchange outgo of about ₹30,000 crore, it added.
Specialty steel is value-added steel wherein normal finished steel is worked upon by way of coating, plating and heat treatment to convert it into high value-added steel that can be used in various strategic applications such as defense, space, power apart from automobile sector and specialized capital goods.
The government stated that by becoming ‘Aatmanirbhar’ (self-reliant) in producing specialty steel, India will move up the steel value chain and come at par with advanced steel making countries such as Korea and Japan.
It is expected that the specialty steel production would become 42 MT by the end of 2026-27, it said, adding that this would ensure that about ₹2.5 lakh crore worth of specialty steel would be produced and consumed in the country that would otherwise have been imported.
Similarly, the export of specialty steel would become about 5.5 MT against the current 1.7 MT earning a foreign exchange of ₹33,000 crore, the statement added.
“The benefit of this scheme will accrue to both big players ie integrated steel plants and to the smaller players (secondary steel players),” it said.
The five categories of specialty steel chosen in the PLI Scheme are coated/plated steel products, high strength/wear resistant steel, specialty rails, alloy steel products and steel wires, and electrical steel.
“There are three slabs of PLI incentives, the lowest being 4% and highest being 12% which has been provided for electrical steel (CRGO). The PLI Scheme for specialty steel would ensure that the basic steel used is ‘melted and poured’ within the country which means that the raw material (finished steel) used for making specialty steel would be made in India only, thereby ensuring that the scheme promoted end-to-end manufacturing within the country,” it said.