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The Production Linked Incentive (PLI) Scheme for Steel manufacturing is an important program by the Indian government. It aims to boost steel production in India. India has relied on imports for high-quality steel and caused a recent imbalance in the steel industry.
To solve this problem, the government started the PLI Scheme. It encourages local manufacturers to increase their production, improve quality, and rely less on imports. You will learn about its goals, sectors involved, companies that benefit, economic effects, challenges, and future possibilities.
What is the PLI Scheme?
The PLI Scheme is a government-driven financial incentive program introduced to boost manufacturing in critical industries, including steel industry.
As announced in 06-Jan-2025, the PLI 1.1 scheme has a total budget outlay of ₹6,322 crore, with a target to increase domestic steel production from 18 million tonnes to 42 million tonnes by 2027. Under this scheme, steel manufacturers receive financial incentives based on incremental sales of domestically produced steel.
The primary objectives include:
- Enhancing domestic steel production by providing incentives for increasing output.
- Reducing reliance on imports for high-grade steel used in infrastructure, defense, and manufacturing.
- Encouraging investment in advanced steel processing and manufacturing technologies.
- Boosting employment opportunities in the steel sector by expanding production units.
- Strengthening India’s global competitiveness in steel manufacturing.
Companies that meet specific production and investment targets qualify for direct incentives, making this an attractive scheme for steel producers looking to expand operations.
Sectors Covered Under PLI for Steel
The scheme focuses on five broad categories of steel, essential for various industrial applications:
- Coated/Plated Steel:
- Includes galvanized and electro-galvanized steel, used predominantly in automotive, construction, and appliance manufacturing.
- Provides corrosion resistance, extending the life of steel products in infrastructure and transportation.
- High Strength/Wear-Resistant Steel
- Used in heavy machinery, defence, and mining industries where durability is crucial.
- Includes advanced steel grades designed for high stress and impact resistance.
- Rail Projects
- Covers high-grade railway tracks for metro, freight, and high-speed rail projects.
- Supports India’s expanding rail infrastructure, ensuring safety and durability.
- Alloy Steel Products & Steel Wires
- Found in engineering, power transmission, oil & gas pipelines, and automotive sectors.
- Includes high-quality steel wires for electrical transmission and mechanical applications.
- Electrical Steel (CRGO/CRNO)
- Cold Rolled Grain Oriented (CRGO) and Non-Oriented (CRNO) steel are crucial for transformers, motors, and electrical appliances.
- India largely imports CRGO steel, making this a priority segment under the PLI Scheme to enhance domestic production.
Companies Benefiting from the PLI Scheme for Steel
Several leading steel manufacturers have been selected under the PLI Scheme for Steel, with investments directed towards increasing capacity, upgrading technology, and expanding production in strategic areas.
Tata Steel
Tata Steel has committed to expanding high-strength and coated steel production, particularly for the automobile, construction, and defence industries.
With increasing demand for high-grade steel, Tata Steel is investing heavily in advanced manufacturing processes to meet both domestic and export needs. Their focus includes developing lightweight and corrosion-resistant steel, which is critical for modern industrial applications.
JSW Steel
JSW Steel has been a major player in the steel market and has directed investments towards electrical and automotive-grade steel production.
The company has set up state-of-the-art processing units to cater to the growing needs of the automobile industry. With a strong emphasis on sustainability, JSW Steel is also working on eco-friendly manufacturing processes to reduce carbon footprints while increasing steel output.
SAIL (Steel Authority of India Limited)
SAIL, one of India’s largest public-sector steel manufacturers, is leveraging the PLI Scheme to boost the production of alloy steel and rails.
Given India’s expanding metro and railway networks, SAIL is enhancing its infrastructure to meet the demand for high-strength rails and tracks. The company is modernizing its plants and incorporating new metallurgical techniques to improve steel quality and production efficiency.
ArcelorMittal Nippon Steel India (AMNS India)
AMNS India is investing in CRGO steel production, which is currently one of India’s most imported steel categories. Their focus is on reducing import dependency by establishing high-efficiency manufacturing units.
The company has also announced plans to increase production capacity for electrical and alloy steel products, ensuring that domestic industries have a reliable supply of high-grade steel.
New Entrants and SMEs
Apart from major corporations, mid-sized firms and new entrants are also benefiting from the PLI Scheme. With the introduction of PLI Scheme 1.1, investment thresholds have been lowered, enabling small and medium enterprises (SMEs) to participate.
This initiative is encouraging competition and promoting technological advancements in steel manufacturing. The presence of more players in the market is expected to drive innovation and improve overall industry standards.
List of companies approved under this scheme: https://plimos.mecon.co.in/ords/plimos/r/138/files/static/v233/Approved_Applicants.pdf
As of the latest updates, the government has received a substantial number of applications from both large and small steel manufacturers. Below is a summary of the application details:
| Application Details | Description |
|---|---|
| Total Applications Received | 79 applications from 35 companies. |
| Applications Approved | 67 applications from 30 companies have been selected. |
| Committed Investment | ₹42,500 crore. |
| Projected Capacity Addition | 26 million tonnes. |
| Employment Generation Potential | Approximately 70,000 jobs. |
These figures underscore the robust response from the industry and the anticipated positive impact of the PLI Scheme on India’s specialty steel sector.
Challenges & Future of the PLI Scheme for Steel
Despite its promising outlook, the scheme faces certain challenges and areas of concern:
- Regulatory Bottlenecks
- Many steel manufacturers have reported delays in securing environmental clearances and land approvals for setting up new plants.
- A streamlined and fast-track approval system is needed to ensure timely project execution and incentive disbursement.
- Investment Barriers for Small Enterprises
- Large firms dominate the steel market, making it difficult for small and medium enterprises (SMEs) to compete.
- The government may need to introduce relaxed investment thresholds or additional subsidies for smaller manufacturers to ensure broader participation.
- Global Competitiveness & Quality Standards
- Indian manufacturers must compete with global steel giants in terms of product quality and cost efficiency.
- Investments in advanced manufacturing technologies and quality assurance will be crucial for Indian steelmakers to establish a strong global presence.
Investment Commitments and Future Expansion
- The scheme is expected to attract ₹40,000 crore in investments across various steel sectors.
- Companies are planning to expand production capacities by 20-30% to meet increasing market demand.
- The government is actively supporting new R&D initiatives to promote the development of next-generation steel products.
With strategic investments and technological advancements, the PLI Scheme is reshaping the steel industry in India, making it more self-sufficient, competitive, and globally relevant.
Economic & Industrial Impact of the PLI Scheme
The PLI Scheme for Steel is set to revolutionize India’s steel manufacturing industry, with wide-ranging economic and industrial benefits:
1. Reduction in Steel Imports
- India has been heavily dependent on imported high-grade steel for its infrastructure and manufacturing needs. With the PLI scheme, domestic production of steel will rise, significantly reducing imports.
- By 2027, India aims to meet a majority of its domestic demand through local production, improving self-reliance and conserving foreign exchange reserves.
2. Job Creation & Industry Growth
- The expansion of steel manufacturing plants is expected to create over 70,000 direct and indirect jobs across India.
- The scheme also encourages technology adoption and skill development, creating a more advanced and competitive workforce in the steel industry.
3. Strengthening Steel Exports
- As India boosts domestic production of steel, it will also become a key export hub for high-grade steel products.
- Global markets such as Europe, the Middle East, and Southeast Asia are potential buyers of India’s high-strength and electrical steel products, enhancing India’s international trade standing.
Conclusion
The PLI Scheme for Steel is a landmark initiative that has the potential to transform India’s steel industry. By enhancing domestic production, reducing import dependency, and promoting technological advancements, the scheme is fostering sustainable growth.
Leading steel manufacturers, as well as emerging players, are making significant investments to strengthen India’s position as a self-reliant and globally competitive steel producer.
However, stakeholders must address challenges such as regulatory approvals, infrastructure constraints, and maintaining global quality standards to maximize the scheme’s impact. The government is continuously refining policies and streamlining approvals to facilitate smoother execution.
With strong industry participation and policy support, India is set to become a global leader in steel manufacturing, reinforcing the country’s vision of “Atma Nirbhar Bharat (Self-Reliant India)” while also boosting exports and strengthening domestic infrastructure.
The PLI Scheme is undoubtedly a stepping stone towards a more robust, competitive, and resilient steel industry in India.
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FAQs
How does the PLI scheme benefit the steel industry specifically?
What are the eligibility criteria for MSMEs under the PLI scheme in the steel sector?
Eligibility typically depends on factors such as the scale of production, investment in technology, and adherence to quality standards. MSMEs in the steel industry must meet specific production benchmarks and demonstrate their potential to expand capacity and boost exports in order to qualify for the scheme.
How can companies apply for the PLI scheme?
What is the duration of PLI Schemes?
A product manager with a writer's heart, Anirban leverages his 6 years of experience to empower MSMEs in the business and technology sectors. His time at Tata nexarc honed his skills in crafting informative content tailored to MSME needs. Whether wielding words for business or developing innovative products for both Tata Nexarc and MSMEs, his passion for clear communication and a deep understanding of their challenges shine through.
