PLI scheme for speciality steel deferred by a year

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Production-Linked Incentive scheme or PLI scheme is an incentive program by the government to promote and boost production of domestic speciality steel.

In October, it was planned to commence in 2022-2023, with incentives released in 2023-2024. But by the latest guideline, this five-year scheme will begin in 2023-24, and the incentives will only be released by 2024-25.

On July 22, the Cabinet approved this scheme which is to improve the domestic speciality steel sector. Now the question might arise about, what is speciality steel is, and why the government is keen on promoting that.

First about this steel. Speciality steel is a value-added variety. Normal steel becomes speciality steel after various processes such as coating, plating and heat treatment.

This steel is heat and corrosion resistant and is stronger than usual. This alloy is used in many strategic sectors like automobiles, power, space, defence etc.

According to the guidelines, four international and two domestic manufacturers will enter this sector.

Through these top six companies, the government intends to increase the production of this alloy. This is in the light of the ever-increasing demand for it. The present-day demand is met by imports worth around ₹30,000 crores.

The scheme is designed with input from the industry and will be deployed in such a way that it will benefit the whole steel sector. It is a demand-driven scheme.

Potential manufacturers are asking for more time to upgrade their infrastructure to produce speciality steel. The applications from the sector will be open on December 29 and will remain open till March 31, 2022.

The whole process will be monitored by state-run Mecon. Its main target is to promote and develop the manufacturing of this alloy domestically. It will help the maturity of the Indian steel industry, technologically and value chain oriented.

There are five broad categories under this scheme, high strength/wear-resistant steel, coated products, alloy steel products, electrical steel and speciality rails.

Earlier, the government has said that the scheme is fund limited. Thus, the payable incentive will not exceed the scheme’s allotted budget. The annual incentive amount will be capped, at ₹200 crores per eligible company.

The eligible companies include joint ventures or group companies under various product categories. The government expects to increase its production by the end of 2026-27 to hit 42 million tons.

In other words, almost 2.5 lakh crore worth of such steel will be produced and consumed domestically, which otherwise had to be imported.

5.5 million tons of such steel will be exported and replace 1.7 million tons of import worth around ₹33,000 crores.

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