Enabling Indian steel industry to contribute its best to Aatmanirbhar Bharat, is how I see the Production Linked Incentive Scheme (PLI) for ‘Specialty Steel’. The Scheme was approved recently by the Cabinet headed by Prime Minister Narendra Modi. His visionary and strategic approach towards creating a new India lays stress on strengthening the manufacturing sector and becoming self-reliant. After assuming charge as Union Steel Minister in July, this is the first policy intervention I have had the privilege to steer. The scheme is a brilliant example of how institutions can be helped to both, think appropriately and make better decisions by being offered choices that have been designed to enable win-win outcomes.
Under the scheme, incentives shall be payable to eligible companies for incremental production of specialty steel on a year-on-year basis, for a period of five years. So, Government is encouraging them to add value to products. This will have dual advantage. They will get better prices for value-added products in domestic as well as in international markets, and also get incentives under the scheme. Both Integrated steel producers as well as secondary steel producers & MSME will be benefited from the scheme. An outlay of Rs 6,322 crore has been planned to boost domestic steel manufacturing of ‘specialty steel’ and attract significant investments. Specialty steel’ grades which need to be incentivised were finalised in consultation with the producers and the user industries. ‘Specialty Steel’ is one of the 13 critical sectors identified for bolstering India’s manufacturing capabilities and enhancing exports, for which PLI Schemes have been approved.
The incentives are aimed at driving India’s growth by giving better value to the consumers, and bringing in high import substitution. Further, the expected additional investments under the Scheme have the potential to not only meet the domestic demand but also create global champions in due course. PLI will help to achieve the Prime Minister’s vision of ‘Atmanirbhar Bharat’ in high-grade steel production besides achieving technological capabilities and creating a competitive and technically advanced eco-system. It will lead to domestic capacity addition in ‘specialty steel’ with an investment of about Rs 40,000 crore, reduction in import of about Rs 30,000 crore and enhanced exports of about Rs 33,000 crore. With potential for creating additional manufacturing capacities of around 25 million tonnes, it is estimated that the scheme has an employment generation potential of about 5,25,000, of which approximately 68,000 will be direct, and the rest will be indirect employment.
Specialty steel segment was chosen for incentivising because Indian steel industry operates at a lower end of the value chain when it comes to steel trade. In FY 2020-21, India’s steel export was 10.7 million tonnes of which 1.8 million tonnes were of ‘specialty steel’ while imports were 4.7 million tonnes of which 2.9 million tonnes were of ‘specialty steel’. This imbalance of high imports and low exports as a percentage of total trade can be reversed by the PLI scheme.
National Steel Policy (NSP), 2017, has set a target of domestically meeting the entire demand of high-grade automotive steel, electrical steel, special steel, and alloys for strategic applications by 2030-31. The country can achieve this vision only if the government incentivises the steel industry to enhance the production of such ‘specialty steel’ grades and move up the value chain.
I am confident that this PLI Scheme will help us leapfrog to be in the league of countries producing high quality value-added steel. Let us all work together to strengthen the “Make in India” brand denoting high quality at competitive prices.
(The views expressed are personal)
