Centre planning phase 2 of specialty steel PLI scheme

The government is planning to launch a second edition of the production-linked incentive (PLI) scheme for specialty steel, which will cover steel used in some defence equipment and automobiles.

"We have some funds left from the first round of PLI and will also seek approval for some more for the second leg," a senior government official told ET on condition of anonymity.

The Centre had provided ₹6,322 crore for the specialty steel PLI. Till now 67 applications from 30 companies have been selected under the first round of the scheme. Contracts for these are expected to be signed by the end of this month.


Companies have committed an investment of ₹42,500 crore in lieu of the PLI and ramping up domestic capacity of specialty steel manufacturing by 26 million tonnes (mt).

Tata Steel, Sunflag Iron and Steel, Kalyani Steel, Bansal Wire Industries, JSW Steel, Steel Authority of India and Jindal Steel are among the companies approved in the first round.

The PLI scheme, launched in October 2021, offers financial incentives of 4-12% on incremental production to steelmakers against a committed investment for increasing output of five specialty steel categories. The incentives will be disbursed over a five-year period from 2024-25.

"In the first round, some applications of specialty steel were left out... These will be targeted in the next round," said the official.

The first round covers coated or plated steel products, high strength or wear-resistant steel, specialty rails, alloy steel products, steel wires and electrical steel.

Specialty steel is a value-added variant used in strategic sectors such as defence, space, power and automobiles. India imports a significant quantity of its specialty steel domestic requirement, resulting in annual forex outgo of about ₹30,000 crore. In 2020-21, India produced about 18 mt of specialty steel and imported 4 mt.

Finance minister Nirmala Sitharaman had announced in the 2021-22 budget an outlay of ₹1.97 lakh crore for PLI schemes, which now cover 14 key sectors. The initiative was part of the government's big push for Aatmanirbhar Bharat (self-reliant India) and attracting investments from overseas as multinational companies diversify supply chains.