India’s Steel Industry on the Cusp of Growth with PLI Scheme 1.1 Launch
The Indian steel industry is set for a significant boost as Union Minister of Steel and Heavy Industries, Shri H.D. Kumaraswamy, prepares to launch the highly anticipated ‘PLI Scheme 1.1’ on January 6, 2025, in New Delhi. The event, scheduled to take place at Hall no 1, Vigyan Bhavan, will also see the opening of applications for the next phase of the scheme, which aims to enhance the steel sector’s competitiveness, foster innovation, and create thousands of jobs in the industry.
The Evolution of Production-Linked Incentives
The concept of Production-Linked Incentives emerged during the global disruptions caused by the COVID-19 pandemic in 2020. As countries around the world were forced into lockdowns, it became evident that there was a critical need for countries to bolster their domestic manufacturing sectors. In light of this, the Indian government launched the PLI scheme to incentivize local production in various sectors, starting with electronics, pharmaceuticals, and food products.
The steel sector was added to the PLI framework in November 2020, marking a significant shift in India's approach to enhancing its industrial capabilities. The introduction of PLI in steel aims to establish India as a global manufacturing hub for specialty steel, which is vital for a range of industries, including construction, automotive, and infrastructure.
PLI Scheme’s Impact So Far: Investment and Employment Generation
The steel ministry’s PLI scheme has already proven to be a catalyst for substantial investment in the sector. With a commitment of ₹27,106 crore (approximately $3.3 billion), the scheme has attracted investments from major steel producers. These investments are expected to generate direct employment for 14,760 individuals in the coming years and contribute to the production of 7.90 million metric tons of specialty steel.
As of November 2024, over ₹18,300 crore has already been invested, and more than 8,660 jobs have been created, signaling the successful execution of the initial phase of the PLI scheme. These numbers demonstrate the potential of the PLI framework in revitalizing the domestic steel industry and supporting its growth in global markets.
Feedback-Driven Update to Attract More Participation
Based on feedback from industry participants, the Ministry of Steel recognized that there was room to refine and improve the scheme to further increase participation. The launch of PLI Scheme 1.1 comes after regular interactions between the ministry and participating companies. These discussions have allowed for valuable insights that will help ensure the updated scheme better meets the needs of the industry and encourages even greater investment.
The enhanced scheme is expected to provide greater opportunities for steel manufacturers, both large and small, to benefit from incentives linked to their production and innovation in the steel sector. By fine-tuning the scheme, the government aims to ensure that more companies, especially those focused on producing high-quality specialty steel, are drawn to India’s manufacturing landscape.
Objectives of the PLI Scheme for Steel Industry
The overarching goal of the PLI Scheme 1.1 is to significantly increase India’s steel production capacity, with a focus on high-grade specialty steel that is in high demand both domestically and globally. Specialty steel is essential for a variety of critical industries, such as automotive manufacturing, construction, and infrastructure development. By ramping up production in these areas, the Indian steel industry can meet the growing demands of these sectors while reducing reliance on imports.
The scheme is also designed to promote research and development, technological advancements, and greater operational efficiency among domestic manufacturers. As companies receive incentives linked to their production growth and innovation, the PLI scheme encourages them to adopt cutting-edge technologies and sustainable practices, further aligning with the global push for greener and more efficient manufacturing processes.
