Indian Economy News

Union Cabinet approves Rs 6,322-cr PLI scheme for speciality steel

  • IBEF
  • July 23, 2021

As per the Indian government, PLI scheme for speciality steel can generate employment of about 525,000, of which 68,000 will be direct and the rest will be indirect employment.

Information and Broadcasting Minister Mr. Anurag Thakur said that the PLI schemed approved by the union cabinet worth Rs. 6,322 crore (US$ 848.9 million) is a step aimed at boosting domestic manufacturing and exports from the sector. The incentive worth Rs. 6,322 crore (US$ 848.9 million) will be provided over five years and can create over 525,000 jobs. This initiative will boost manufacturing and will help in reducing imports. Product such as coated/plated steel products; high strength/wear resistant steel; specialty rails; alloy steel products, steel wires and electrical steel will be covered under this scheme which are used in a variety of applications such as  white goods, automobile body parts and components, pipes for transportation of oil and gas, boilers, ballistic and armour sheets meant for defence application, high-speed railway lines, turbine components, electrical steel meant for power transformers and electric vehicles

The PLI scheme is aimed to boost the high-grade specialty steel production of in the country. This will also lead to enhanced exports and lower dependence on imports for high-end steel. The scheme is likely to bring in investment of approximately Rs 40,000 crore (US$ 5.37 billion) and capacity addition of 25 MT. This scheme will be 5 years and will start from FY24 to FY28.

In steel sector, India operates at the lower end of the value chain and the value-added steel grades are mostly imported. This is because of the disabilities faced by the steel industry to the tune of $80-100 per ton, on account of higher logistics and infra cost, higher power and capital cost and taxes and duties. Indian government said that the objective of the PLI scheme for specialty grade steel is to address this disability by incentivising production of specialty steel. The scheme is planned to incentivise eligible manufacturers by paying 4% to 12% incentive on incremental production. The scheme will also help Indian steel industry to mature in terms of technology and move up the value chain.

This scheme is applicable to Indian companies engaged in manufacturing of the identified ‘specialty steel’ grades and should also ensure that the steel used for making ‘specialty steel’ is ‘melted and poured’ in the country.

The Indian said that this scheme 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.

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

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