Rs 6,322 crore PLI scheme for Specialty Steel Approved by Union Cabinet

Union Cabinet approves PLI Scheme for Specialty Steel worth Rs. 6322 crore. PLI stands for Production-linked Incentive. This scheme is a great initiative taken by govt. After Implementing This scheme it is expected to create an employment about 5,25,000. Apart from this It has ben expected that 68,000 will be directly recruited.

PLI Scheme for Specialty Steel
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Before we know about PLI Scheme for Specialty Steel every one should know, what is specialty steel ? Well there no as such definition of specialty steel. Though we can say ‘Specialty steel’ is a downstream, value-added product of steel manufacturing process. We can Summarize as follows :

  • Specialty Steel is a value-added steel. It is made by processing normal finished steel.
  • Normal finished steel has converted to Specialty Steel by way of coating, and heat treatment and other mechanical process.
  • Specialty Steel not only used in the automobile sector but also it is widely used in various strategic applications such as defence, space, power etc.
  • Specialty Steel are categorized in various types such as, coated/plated steel products, high strength/wear resistant steel, specialty rails, alloy steel products and steel wires, electrical steel etc.

PLI Scheme for Specialty Steel – All You Need to Know

Objective of PLI Scheme for specialty steel

The Main objective of PLI Scheme for Specialty Steel is the government intends on becoming self-sufficient in specialty steel production and move up higher on the steel value chain to come at par with advanced steel making countries like South Korea and Japan. The government also intends on expanding the exports of specialty steel to 5.5 MT by 2026-27, and consequently refueling India’s forex reserves by approximately INR 330 billion (US$4.43 billion).

Specialty Steel has been chosen as the target segment because out of the production of 102 million tonnes steel in India in 2020-21, only18 million tonnes value added steel/ specialty Steel was produced in the country. Apart from this out of 6.7 million tonnes of imports in the same year, approx. 4 million tonnes import was of specialty steel alone resulting in FOREX outgo of Approx. Rs. 30,000 crores. By becoming Aatmanirbhar in producing specialty Steel , India will move up the steel value chain and come at par with advanced steel making countries like Korea and Japan.

“The objective of the PLI scheme for specialty Steel grade steel is to address this disability by incentivizing production of specialty steel within the country. The scheme proposes to incentivize eligible manufacturers by paying between 4% to 12% incentive on incremental production. PLI incentive will also help the Indian steel industry mature in terms of technology and move up the value chain,” said government.

PLI scheme for specialty steel is expected to play the important role in strengthening domestic steel value chain and will incentivise the steel sector to invest in technological capability building to contribute to global steel value chain by producing value added steel, added government. Considering the additional production and investment, the scheme has an employment generation potential of about 525,000 of which 68,000 will be direct and the rest will be indirect employment.

Source : The Hindu

  • Reason for choosing Specialty Steel:
    • To Increase Production:
      • Specialty Steel has been targeted for that scheme by the government because Only 18 million tonnes of value-added steel were produced in the country. in 20220-21.So
    • To Reduce Imports:
      • The PLI scheme will boost manufacturing capacities by Indian mills in this segment and MSMEs will be able to source from them directly.

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Categories Chosen in PLI scheme for specialty steel

The scheme covering Specialty steel grades of 5 indicative product categories as follows :

  • Coated/Plated Steel Products
  • High Strength/ Wear resistant Steel
  • Specialty Rails
  • Alloy Steel Products and Steel wires
  • Electrical Steel

it is expected that after completion of the Scheme India will start manufacturing products like API grade pipes, Head Hardened Rails, electrical steel (needed in transformers and electrical appliances) which are currently manufactured in very limited quantity or not manufactured at all.

Slab of PLI scheme for specialty steel

There are three slabs of PLI incentives, the lowest being 4 % and highest being 12% which has been provided for electrical steel (CRGO).

PLI Slab2022-232023-242024-252025-262026-27
PLI – A4%5%5%4%3%
PLI – B8%9%10%9%7%
PLI – C12%15%15%13%11%

Benefits of PLI scheme for specialty steel

  • the scheme is expected to bring in investment of approximately ₹40,000 crores and capacity addition of 25 MT for specialty Steel.
  • It is expected that the production would become 42 MT by the end of 2026-27.
  • this would ensure that about ₹2.5 lakh crore worth of the Steel would be produced and consumed in the country that would otherwise have been imported
  • the export of that Steel would become about 5.5 MT against the current 1.7 MT earning a foreign exchange of ₹33,000 crore
  • It will generate employment for about 5 lakh people, including direct employment for 68,000 people
  • Projected export (in volume) is expected to become more than 3 times the present volume.
  • Projected import (in volume) is expected to reduce by 4 times.
  • An expected investment of ₹39,625 crore by 2029-30.

Eligibility criteria under PLI Scheme

  • threshold minimum incremental production and minimum investment

All applicants committing to the minimum thresholds of incremental production and investment are eligible.
• The scheme does not distinguish between greenfield and brownfield investments.
• The investment/production must be in addition to the existing facilities and cannibalisation of the existing product lines will not be acceptable.

Who can apply under the Scheme?

A company registered in India under the Companies Act 2013, that is engaged in manufacturing of the identified specialty steel grades can apply under the PLI scheme through an online portal. However, the approval is subject to the condition that end-to-end manufacturing must take place within the country. It means that the input material being melted and poured within the country using iron ore/scrap/sponge iron/pellets etc. shall be eligible to apply for incentive under the scheme.

Incentives under PLI scheme

Under the PLI scheme, incentives will be computed based on the incremental production, which is multiplied by the incentive slab rate as applicable and the weighted average sales price of the product.

There are three slabs of PLI incentives under this scheme, the lowest being 4 percent and highest being 12 percent which has been provided for electrical steel.

How is incentive calculated under PLI scheme?

Incentive is calculated based on the incremental production which is multiplied by the incentive slab as applicable and the weighted average sales price of the product. For example,
A = Incremental sales in current year with reference to previous year or the base year whichever is higher

B = Weighted Average sale price (net of taxes) in current year
C = Weighted Average sales price (net of taxes) in the base year (2019-20)
Incentive = (A/B) x (B or C, whichever is lower) x (PLI rate as applicable)/100
*Current year means the year for which PLI has been claimed.

Source of All Information Regarding PLI Scheme For specialty steel

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