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Securing supply: 2nd steel PLI in the works

The new initiative is currently in the final stages of discussions at the steel ministry, and is expected to be implemented before the end of the current year, after required approvals, including from the Union cabinet. (Mint)
The new initiative is currently in the final stages of discussions at the steel ministry, and is expected to be implemented before the end of the current year, after required approvals, including from the Union cabinet. (Mint)

Summary

  • Steel ministry sets year-end target for scheme implementation

NEW DELHI : The government is set to introduce a second production-linked incentive (PLI) initiative for the steel industry, aimed at bolstering the local capital goods industry and boosting supplies of essential materials in the country.

The expansion of the scheme aims to support the manufacture of capital goods and critical consumables such as refractories, low carbon and low loss of ignition fluxes, rollers, carbon capture units, coal and iron beneficiation agglomeration equipment, and other imported materials required in steel making. The new initiative is currently in the final stages of discussions at the steel ministry, and is expected to be implemented before the end of the current year, after required approvals, including from the Union cabinet.

The draft proposal is expected to be ready by June after consultations with Niti Aayog and the department for promotion of industry and internal trade (DPIIT). Thereafter, it will be reviewed by an empowered group of secretaries, headed by the cabinet secretary, before seeking cabinet approval, said a senior government official aware of the development. Government officials said the new PLI would be an extension of the current scheme, with a focus on capital assistance to produce special steel grades that are not covered by existing PLI provisions, or where no MoU have been signed so far.

Steel Production data
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Steel Production data

“The idea is to make the country’s steel sector self-sufficient to meet not only domestic demand but become an important centre to meet the steel needs of the globe. While PLI-1 provided incentives to promote the manufacture of special steel not being made in the country so far, PLI-2 will look to expand the list of special steel while also supporting domestic manufacturing of capital goods and consumables and meet the needs of the industry to a greater extent," said the official cited above.

The proposal on PLI-2 is nearing completion after inputs were received from stakeholders, including primary and secondary steel producers and the downstream steel segments from the empowered group of secretaries. As the process of getting approval and then cabinet approval would take about six months, the steel ministry expects that PLI-2 may be notified somewhere around December. It would then run for five years, as is the case with other PLI schemes.

A query sent to the spokesperson for the steel ministry remained unanswered.

But officials said the new PLI for steel would come soon with an even higher budgetary provision than 6,322 crore allocated to the existing version, with disbursements expected to begin from FY26. The budgetary aspect would be discussed separately with the finance ministry. The existing scheme provides incentives in three slabs (Slabs A, B, C) varying between 4-12% of incremental production. While the level of incentives may be maintained at the same or higher level, the new scheme’s focus will be on developing domestic manufacturing ecosystems for high-value capital goods and specialized consumables.

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