Indian Economy News

PLI scheme for specialized steel is a big boost for the industry, says JSW's Rao

  • IBEF
  • July 27, 2021

Mr. Seshagiri Rao, joint managing director and group chief financial officer of JSW Steel Ltd said that the production-linked incentive (PLI) scheme for ‘specialty steel’ will be a big positive for India's steel industry.

With a financial outlay of Rs. 6,322 crore (US$ 849.2 million) for a period of five-years, it is expected to bring in investment of approximately Rs. 40,000 crore (US$ 5.37 billion) and capacity addition of 25 million tonnes for specialty steel. It also aims to promote the manufacturing of specialty steel at domestic level.

He said that the scheme will increase the Indian manufacturing activity and is likely to bring investments as well as generate employment.  Also, India should create the capability to reduce the imports and should meet the domestic demand and exports. The purpose of the PLI scheme is restricting ₹200 crore per company per annum is to benefit small players.

Specialty steels have various strategic applications such as in defence, space, power sector besides from the automobile sector, specialized capital goods and others.

He also added that since specialty steel is required in various critical industries but almost two-third of it is imported, it would address the supply chain issues for various end-user segments. End-to-end manufacturing ensures that the entire process from melting iron to manufacturing end-product is done in India and no import of any part is allowed.

In FY21, India was the second-largest producer of steel in the world as per Care Ratings, however, out of the total steel production - 102 million tonnes (MT), only 18 MT was value-added/specialty steel.

India’s specialty steel production was 85% of the domestic demand and India was a net importer resulting in a forex outgo of ₹30,000 (US$ 4.03 billion) crore approximately. In FY21, out of the 6.7 MT of finished steel imports, 4 MT was of specialty steel.

India’s average import value is US$ 2,000-2,500 per tonne whereas the average export value for steel is US$ 600-800 per tonne.

By incentivizing, the industry can move up the value chain and operate at the higher end. 

JSW Steel Ltd, is India’s most valuable steelmaker with record profit of ₹5,900 crore for the fiscal first quarter amid a surge in the prices of the alloy. The company had reported a loss of ₹582 crore in the corresponding quarter of the previous year.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.