The aim is to increase specialty steel production in India from 18 MT (million tonnes) currently to 42 MT by 2026-27

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 objective of the PLI scheme for ‘speciality steel’ is to promote manufacturing of specialty steel grades within the country by providing financial incentives.

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.

According to a government statement, the scheme will give employment to about 525,000 people of which 68,000 will be direct employment.

The five categories of specialty steel which have been chosen in the PLI Scheme are: coated/plated steel products, high strength/wear resistant steel, speciality rails, alloy steel products and steel wires, electrical steel.

Speciality steel can be used in various strategic applications like defence, space, power, automobile sector, specialised capital goods, among others.

India is trying to attract firms that are exploring a China-plus-one strategy for production. With the disruptions caused in the wake of the 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 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.

PM 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.