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The Union cabinet chaired by Prime Minister Narendra Modi on Thursday approved a 6,322 crore production-linked incentive (PLI) scheme for specialty steel that is expected to attract investments of around 40,000 crore.

The decision is part of India’s playbook of creating global manufacturing champions in India and bring the country on a par with global steel making majors such as South Korea and Japan. The aim is to help India specialty steel production reach 42 million tonnes (MT) by 2026-27 from 18MT today.

India is trying to attract firms that are exploring a China-plus-one strategy for production. With the disruptions caused in the wake of coronavirus pandemic that originated in China, several firms are looking to leverage the incentives offered under the marquee PLI scheme to set up a manufacturing base in India.

“The duration of the scheme will be five years, from 2023-24 to 2027-28. With a budgetary outlay of 6,322 crore, the scheme is expected to bring in investment of approximately 40,000 crore and capacity addition of 25MT for specialty steel. The scheme will result in employment for about 525,000 people of which 68,000 will be direct employment," the government said. “There are 3 slabs of PLI incentives, the lowest being 4% and highest being 12%, which has been provided for electrical steel," it added.

Modi in February invited global firms to take advantage of the 1.97 trillion PLI scheme for 13 sectors and expand their manufacturing in India. The plan involves removing sectoral disabilities and creating economies of scale to develop complete component eco-systems in India.

“Specialty steel has been chosen as the target segment because out of the production of 102 million tonnes steel in India in 2020-21, only 18 million tonnes value added steel/specialty steel was produced in the country. Apart from this, out of 6.7 million tonnes of imports in the same year, about 4 million tonnes was of specialty steel alone resulting in forex outgo of 30,000 crore," the government said.

This will ensure that speciality steel worth about 2.5 trillion will be produced and consumed in the country, which would otherwise have been imported, the government said. “Similarly, the export of specialty steel will become around 5.5 million tonnes as against the current 1.7 million tonnes of specialty steel that gets forex of 33,000 crore," it said.

“The steel sector will get an impetus with this crucial cabinet decision," Modi said in a tweet.

The Indian steel industry was enthused by Thursday’s decision. “This will go a long way in enabling growth, not just for the steel sector, but also for overall infrastructure development. It will help bring the country on a par with the best in the industry globally," said Dilip Oommen, president, Indian Steel Association, and chief executive officer, ArcelorMittal Nippon Steel India.

In another development, the cabinet approved the setting up of an integrated multipurpose infrastructure development corporation for the Union territory of Ladakh. The entity, to be developed on the lines of Andaman & Nicobar Islands Integrated Development Corporation Ltd, will work as the main construction agency for infrastructure development in the region. In addition, it will also work to promote industry, tourism and marketing of local products and handicraft and undertake transport activities. The entity is part of India’s strategy to develop the Union territory.

The cabinet on Thursday also approved a plan to establish a central university in Ladakh at a cost of 750 crore.

“Today’s cabinet decision will ensure all-round development of Ladakh and provide a range of opportunities to the dynamic youth there," Modi said in another tweet.

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