PLI Scheme 1.1 for specialty steel launched: Here are the key features

Union Minister of Steel and Heavy Industries H.D. Kumaraswamy launched the second round of PLI scheme for specialty steel, termed PLI Scheme 1.1 today at Vigyan Bhavan New Delhi. The new PLI scheme is aimed at developing self-reliance in the production of specialty steel and is expected to lead to a reduction in the imports of specialty steel, while ensuring more jobs. The ₹6,322 crore PLI scheme 1.1 for specialty steel will cover five product categories and will open from January 6th to January 31st, 2025. It will be implemented during the production period of FY2025-26 to FY 2029-30.

The application window is live from today (the 6th of January 2025) and up to January 31, 2025.

Here are the key features of the PLI Scheme 1.1:-

1. Certain changes have been incorporated to make the scheme more investor-friendly. These include a reduction in threshold investment and capacity for the CRGO product sub-categories. This will allow the carry forward of excess production to the following year for claiming incentives and reduction in threshold investment under capacity augmentation mode.

2. PLI Scheme 1.1 covers five product categories in line with the existing PLI scheme, namely coated/plated steel products, high strength/wear resistant steel, speciality rails, alloy steel products & steel wires and electrical steel. These products have a wide range of applications, from white goods to transformers to automobiles and other niche sectors.

3. Recognising the importance of producing quality steel, energy efficiency and other process improvements, companies investing in the augmentation of existing capacities will be allowed to participate in the scheme.

4. Cold-rolled grain-oriented steel (CRGO) is a high-value steel used in the production of power transformers used in HT power distribution. The technology to make CRGO is not available with any of the Indian steelmakers. The steel ministry aims to increase the production of CRGO within the country.

5. By reducing the investment and capacity creation thresholds to ₹3,000 crore and 50,000 tonnes, respectively, the government thinks the industry would be enthused to participate in the category.

6. The ministry says companies can carry forward excess production to the following year to claim incentives. This will ensure that incentives are distributed optimally, and no company is denied incentives, if they are unable to achieve an incremental production in the following year after a good year.

First round of PLI scheme for specialty steel

The first round of the PLI Scheme for specialty steel was notified on July 29th, 2021, with a budgetary outlay of ₹6,322 crore. The objective of the new PLI scheme was to promote the manufacturing of value-added steel grades within the country and help the Indian steel industry mature in terms of technology as well as move up the value chain.

In the first round, 44 projects by 26 companies were active, with a committed investment of about ₹27,106 crore and 24 million tonnes of downstream capacity creation. As of November 2024, the actual investment achieved was around ₹18,300 crore, with direct employment generation of 8,300. The payout for the participants in the first round will be about ₹2,000 crore.