PLI Scheme 1.1 Launched For Steel Sector To Boost Production; Rules Eased
The central government on Monday announced the launch of another round of the performance-linked incentive scheme for the steel sector, which is aimed at boosting the production of specialty steel.
Participation in the scheme will remain open from Jan. 6 to Jan. 31, 2025, the Union Ministry of Steel said in a release. The scheme will be valid from fiscal 2026 to fiscal 2030.
Similar to the first round of PLI, the PLI 1.1 scheme for the steel sector will also cover the following five product categories — coated/plated steel products, high strength/wear resistant steel, specialty rails, alloy steel products, and steel wires and electrical steel.
The scheme will operate "within the funds originally allocated for the scheme, i.e., Rs 6,322 crore", the steel ministry said.
Union Steel Minister HD Kumaraswamy, while launching the PLI 1.1 scheme in New Delhi, expressed hope that the industry will participate actively to invest and "strengthen Brand India", reduce imports, and position India as a "global steel powerhouse".
Rules Eased
As compared to the previous round of PLI, certain changes have been incorporated based on industry feedback to "make the scheme more investor friendly", said Sandeep Poundrik, secretary in the steel ministry.
Under the new rules, "not all companies would need to install new mills", the ministry said in its release, adding that companies investing in "augmentation of existing capacities" will be allowed to participate in the scheme. "Investment in such cases will be 50% of threshold," it further said.
For cold-rolled grain-oriented steel, the investment threshold has been lowered to Rs 3,000 crore, and the capacity creation threshold has been brought down to 50,000 tonnes, the release noted.
Notably, the first round of PLI scheme for specialty steel was notified in July 2021 with a budgetary outlay of Rs 6,322 crore. It was aimed at reducing the reliance on imports for speciality steel, which is used in crucial sectors like defence, automobile and electrical.
"In the first round, 44 projects by 26 companies are active with a committed investment of about Rs 27,106 crore and 24 million tonnes of downstream capacity creation," according to the steel ministry.
As of November 2024, the actual investment achieved is around Rs 18,300 crore, the ministry said, adding that the estimated payout for the participants in first round will be about Rs 2,000 crore.
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