Business Standard

Cabinet okays PLI scheme for specialty steel

- ISHITA AYAN DUTT Kolkata, 22 July

The Union Cabinet on Thursday approved a ~6,322-crore production-linked incentive (PLI) scheme for specialty steel that is expected to attract an additional investment of about ~40,000 crore and add capacity of 25 million tonnes in the segment.

The Union Cabinet on Thursday approved a ~6,322-crore production­linked incentive (PLI) scheme for specialty steel that is expected to attract an additional investment of about ~40,000 crore and add capacity of 25 million tonnes in the segment.

According to a government statement, the scheme will provide jobs to about 525,000 people, of which 68,000 will be direct employment.

Specialty steel has been chosen as the target segment by the government because only 18 mt value added steel/specialty steel out of a production of 102 mt of steel in 2020-21 was produced in the country.

Moreover, of 6.7 mt of imports in the same year, about 4 mt was of specialty steel, resulting in forex outgo of about ~30,000 crores, as per estimates.

The five categories of specialty steel that have been chosen in the PLI scheme are coated/plated steel products, high strength/wear resistant steel, specialty rails, alloy steel products and steel wires, electrical steel.

Specialty steel can be used in various strategic applicatio­ns like defence, space, power, and automobile sector, among others.

There are three slabs of PLI incentives, the lowest being 4 per cent and highest being 12 per cent, which has been provided for electrical steel (CRGO). The duration of the scheme will be five years, from 2023-24 to 2027-28.

Dilip Oommen, president of Indian Steel Associatio­n and chief executive of Arcelormit­tal Nippon Steel India (AM/NS India), said it would help bring the country on a par with the best in the industry globally.

The steel sector is on an uptrend and major integrated producers have lined up expansion plans. The scheme is expected to boost those plans further.

Tata Steel MD and Chief Executive TV Narendran said, “Committed to nation building, Tata Steel has been a pioneer in import substituti­on, especially in the auto sector.”

“As we continue on our journey of growth, the PLI scheme will provide an added advantage to our future plans where value-added products will be a major focus.”

Ranjan Dhar, chief marketing officer of AM/NS India, said the scheme would incentivis­e investment­s in very high-end steel such as the automotive segment and also coated steel for solar applicatio­ns to name a few.

“Value-added steel will be a major focus area for the company. All this will benefit our customers in India and abroad,” he said.

Soma Mondal, chairman of Steel Authority of India (SAIL), said this decision would have far-reaching positive impacts on the domestic steel industry in general and SAIL in specific. “We shall consider the scheme while deciding our next capex cycle and product-mix in the coming times,” she said. JSPL Managing Director VR Sharma, too, said the company would “definitely” register for the scheme. “Most of the imports into India are in the value-added and specialty segment. The scheme will boost manufactur­ing capacities by Indian mills in this segment and MSMES will be able to source from them directly,” he said.

The government expects the benefits of the scheme to accrue to both integrated steel plants and smaller players (secondary steel players) as speciality steel production to increase to 42 mt by the end of 2026-27.

“This will ensure that approximat­ely ~2.5 trillion worth of specialty steel will be produced and consumed in the country which would otherwise have been imported. Similarly, the export of specialty steel will become around 5.5 mt as against the current 1.7 mt of specialty steel getting forex of ~33,000 crore,” a government statement said.

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