Revamped PLI scheme 1.1 for specialty steel launched: Key changes to boost investment

The Union government on Monday launched the revamped Production Linked Incentive (PLI) Scheme 1.1 for specialty steel to boost domestic manufacturing and reduce dependence on imports. The scheme, launched by Steel Minister H.D. Kumaraswamy at Vigyan Bhavan in New Delhi, will cover five product categories and operate from fiscal 2025-26 to 2029-30.

The revised scheme addresses industry demands for relaxed thresholds to enable greater participation.

"The changes made in PLI scheme for specialty steel reflect the government’s commitment to strengthening domestic production, fostering innovation, and reducing imports," the ministry of steel said in a release.

Addressing the event, Kumaraswamy expressed hope that the industry will participate actively to invest and strengthen Brand India, reduce imports, and position India as a global steel powerhouse.

PLI Scheme 1.1 covers coated steel products, high-strength steel, specialty rails, alloy steel, and electrical steel -- materials critical for sectors such as automotive, white goods, and power infrastructure.

Sandeep Poundrik, Secretary, Ministry of Steel, said there were no participants in eight sub-categories in the previous round, hoping there would be wider participation this time.

Revised threshold under PLI scheme 1.1

The government has reduced investment thresholds for cold-rolled grain-oriented (CRGO) steel, a high-value steel essential for energy-efficient transformers. The investment requirement has been lowered to ₹3,000 crore with a production capacity of 50,000 tonnes to encourage participation in this critical category.

No Indian manufacturer currently produces CRGO.

"By reducing the investment and capacity creation thresholds to Rs.3,000 crore and 50,000 tonnes respectively, Ministry of Steel hopes that the industry would be enthused to participate in the category," the release said.

Companies can carry forward surplus production to meet shortfalls in the following year for the purpose of claiming incentive.

"This will ensure that incentives are distributed optimally, and no company is denied incentives, if they are unable to achieve an incremental production in the following year after a good year," it added.

Applications are open until January 31, 2025, with the ₹6,322 crore budget from the initial scheme remaining unchanged.

The initial PLI scheme, announced in 2021, saw 26 companies commit ₹27,106 crore in investments for 44 projects, with an expected downstream capacity of 24 million tonnes. As of November 2024, actual investments totaled ₹18,300 crore, creating 8,300 jobs, according to government data.

The government estimates a ₹2,000 crore payout to participants from the first round, which remains operational alongside the new scheme.