PLI scheme for steel sector: 4-15% incentives to be offered

There will be a cap on the maximum PLI payable to each beneficiary. The incentive under the scheme will be paid for five years. The incentive payable for a particular year shall be due for payment in the following year.

The Union Cabinet is likely to consider for approval a Rs 6,322-crore production-linked incentive (PLI) scheme for the steel sector in its next sitting. The scheme will offer an incentive of 4-15% to eligible companies on incremental production.

The government estimates that the scheme, to be implemented between 2023-24 and 2029-30, will lead to incremental investment of Rs 41,000 crore and generate over 60,000 direct and around five lakh indirect employment by 2026-27.

There will be a cap on the maximum PLI payable to each beneficiary. The incentive under the scheme will be paid for five years. The incentive payable for a particular year shall be due for payment in the following year.

The financial outgo under the scheme is expected to reach to its peak in 2026-27 and come down to its lowest towards the end of the scheme period in 2029-30.
In November 2020, the Cabinet had approved introducing PLI for ten sectors with a total outlay of Rs 1,45,980 crore for enhancing India’s manufacturing capabilities and exports, including specialty steel. These were in addition to the three sectors for which PLI were approved by the Cabinet in April 2020. While many of them have been cleared by the Cabinet, specialty steel is yet to get the approval.

PLI schemes are a cornerstone of the government’s push for achieving an Atmanirbhar Bharat. The objective is to make domestic manufacturing globally competitive and to create global champions in manufacturing.

Specialty steel grades have enough scope for employment generation in both downstream and upstream industries, better value to the consumers and higher import substitution potential.

India exports more steel in volume than it imports. While Indian exports are of those items which are at the lower end of the value chain; imports are of higher-grade variants. Though India has a relatively lower requirement for specialty steel, even that is met through imports.

“The PLI scheme for specialty steel will be instrumental in achieving higher growth rate and will help augment capacities in high-grade steel products with potential to create global champions,” said a source.