Introduction of PLI Scheme 1.1: A Game Changer for India's Steel Industry
On January 6th, 2025, Shri H.D. Kumaraswamy, the Union Minister of Steel and Heavy Industries, officially launched the second round of the Production Linked Incentive Scheme, termed PLI Scheme 1.1, for specialty steel. The announcement was made at Vigyan Bhavan, New Delhi, in the presence of senior ministry officials and industry leaders. This strategic initiative aims to propel India towards becoming a global leader in steel production while fostering self-reliance.
Key Details and Modifications in PLI Scheme 1.1
The newly launched PLI Scheme 1.1 will run from the fiscal year 2025-26 to 2029-30. It continues the momentum set by the original PLI scheme, targeting five key product categories: Coated/Plated Steel Products, High Strength/Wear Resistant Steel, Specialty Rails, Alloy Steel Products & Steel Wires, and Electrical Steel. These products are integral to various industries, ranging from automobiles and white goods to power transformers and niche sectors.
The scheme is part of the government's ongoing effort to support the Indian steel industry in reducing its reliance on imports while enhancing domestic manufacturing capabilities. The total fund allocation remains at ₹6,322 crore, the same as the first phase.
New Changes Aimed at Boosting Industry Participation
In response to industry feedback, several changes have been made to ensure the scheme is more investor-friendly. The Ministry of Steel has reduced the threshold investment and capacity requirements for certain sub-categories, particularly Cold-Rolled Grain-Oriented Steel. For example, the CRGO product category, which is essential for manufacturing power transformers, has seen its investment and capacity thresholds lowered to ₹3,000 crore and 50,000 metric tons, respectively.
Additionally, the scheme now allows companies to carry forward excess production to the next year, ensuring that businesses are not penalized for slight production fluctuations. This measure aims to make the scheme more flexible and optimize the distribution of incentives across the steel sector.
Progress and Achievements of the First Round of PLI Scheme
The first round of the PLI Scheme for specialty steel, launched in 2021, was a resounding success, with 44 projects from 26 companies committing to investments totaling ₹27,106 crore. This round resulted in the creation of around 24 million metric tons of downstream steel capacity, with actual investments reaching ₹18,300 crore by November 2024. The scheme also generated approximately 8,300 direct jobs.
