India’s Strategic Push to Dominate Specialty Steel Production
The Production-Linked Incentive Scheme 1.1 has taken center stage in India’s efforts to bolster its domestic steel manufacturing capabilities, particularly in the specialty steel sector. On March 24, 2025, the Ministry of Steel celebrated a significant milestone with the signing of 42 Memorandums of Understanding under this scheme. The PLI 1.1 Scheme is a crucial part of India’s strategy to boost local production of high-grade steel and reduce the country’s dependence on imports for specialty steel, which has been a longstanding challenge despite India being the second-largest steel producer and consumer globally.
Union Steel Minister H.D. Kumaraswamy heralded the scheme as a pivotal step toward fulfilling Prime Minister Narendra Modi’s vision of “Make in India”, ensuring that India not only becomes self-reliant but also a global leader in steel production. The scheme's main objective is to reduce India’s reliance on imported high-grade steel, which is essential for various critical sectors, including automotive, defense, infrastructure, and electronics.
The Growth of Specialty Steel Production under PLI 1.1
Launched in July 2021, the PLI Scheme 1.1 for specialty steel was designed to enhance India's production capacity in high-value steel varieties. The scheme is divided into five broad categories and 19 sub-categories, each targeting specific types of specialty steel, such as automotive steel, high-strength low-alloy steel, stainless steel, and more. To qualify for the scheme’s incentives, companies must be registered in India and engaged in the complete steel production process, from raw materials to finished products.
The scheme has seen a strong participation from the industry, particularly in its second round. In Round 2, 25 companies submitted 42 applications, collectively committing investments worth a staggering ₹17,000 crore. These applications signal the steel industry’s recognition of the government’s efforts to make India a hub for specialty steel production. This investment commitment highlights a growing trend among domestic steelmakers to increase their production capacity for high-grade varieties, driven by both the PLI incentives and the increasing demand for specialty steel.
PLI Scheme’s Incentives for Investment and Output
To incentivize growth and spur greater production, the PLI 1.1 Scheme offers financial rewards in the form of 3-4% incentives based on production targets and the scale of investments made by the companies. The first round of the scheme had already seen 44 applications from 23 companies, with one project already receiving disbursement for incentives. This strong response in the first round laid the groundwork for an even more enthusiastic second round of applications.
Minister Kumaraswamy commended the work of the Ministry of Steel and MECON (Metallurgical & Engineering Consultants India Limited) for their role in expediting the scheme’s implementation, further emphasizing the critical nature of fast-tracking such projects for national growth.
The Government’s Call for Domestic Steelmakers to Invest in Specialty Steel
In his address, Kumaraswamy called on domestic steel manufacturers to focus on the production of specialty steel, noting that while India is already a steel powerhouse, it still lags in the production of some high-grade varieties. These materials are vital for meeting the demands of specialized industries such as automotive, aerospace, and defense, which require precision-engineered steel. The minister urged local manufacturers to step up and take advantage of the incentives provided under the PLI scheme, stating that success in producing specialty steel domestically would not only bolster national self-reliance but also drive the steel sector’s capacity expansion.
The steel industry’s transformation toward specialty steel manufacturing is expected to create jobs, foster technological advancements, and position India as a key player in the global steel market. As steelmakers invest in new plants and enhance their production capacities, the broader economy stands to benefit from the development of a more self-sustaining and competitive industrial landscape.
The Role of PLI in India’s Economic Growth
The PLI 1.1 Scheme is a key component of India’s broader economic strategy, which aims to foster self-reliance (Atmanirbhar Bharat) by encouraging domestic manufacturing across various sectors. Specialty steel, being an integral part of many high-value industries, holds a unique position in this transformation. With a goal to meet not only domestic demand but also export requirements, the government’s support through the PLI scheme aims to catapult India’s steel industry into the global spotlight.
PLI Scheme Milestones and Industry Participation
• The first round of the PLI Scheme 1.1 saw 44 applications from 23 companies, with incentives already awarded to one project.
• The second round has seen a notable increase in industry participation, with 25 companies submitting 42 applications, promising a ₹17,000 crore investment commitment.
• Domestic steelmakers are encouraged to focus on specialty steel production to reduce dependency on imports and to support the growing demand for high-grade steel varieties in sectors like automotive, infrastructure, and defense.
Key Takeaways:
• The PLI 1.1 Scheme was launched to promote the domestic production of specialty steel and reduce reliance on imports, aligning with India’s Make in India vision.
• 42 MoUs have been signed in the second round of the scheme, with a total investment commitment of ₹17,000 crore from 25 companies.
• Incentives of 3-4% are being offered to companies based on their production targets and investments, fostering greater participation in the scheme.
• Minister H.D. Kumaraswamy has urged steelmakers to prioritize specialty steel production, which is crucial for meeting the needs of high-tech industries like automotive, aerospace, and defense.
• The scheme is expected to boost capacity, drive technological advancements, and create jobs in India’s steel manufacturing sector.
• With the second round of the PLI 1.1 Scheme now in full swing, India’s specialty steel sector is poised for significant growth, aligning with national goals for economic self-reliance.
