India’s steel ministry has unveiled the second version of its productivity linked incentive (PLI) scheme for the steel sector, a ministry statement said on Tuesday, January 7.
Applications from steel companies seeking incentives under the new PLI scheme opened on Monday, January 6, with the deadline set for January 31.
Under the first version of the PLI scheme, the government had set aside a corpus of $470 million to offer fiscal incentives to steel companies, creating additional capacities for production of specialty steel and aimed at checking imports.
The launch of the first version was delayed due to poor demand for the alloy, procedural issues and lacklustre participation of domestic companies in the initial round of the scheme, which was approved by the government in 2021.
“We have finalized PLI 1.1 without much changes from the earlier scheme. The scheme parameters are based on inputs from the industry and funds for supporting it would come from the balance remaining in the PLI 1.0 corpus of $470 million,” the ministry said in the statement.
The terms of the scheme are largely similar to other PLIs that incentivize production of identified products for a period of up to five years. But the focus of PLI 1.1 would be to promote the manufacturing capacity of CRGO or electric grade steel, the ministry said.
Accordingly, the newer PLI scheme has a reduced investment threshold for CRGO (cold rolled grain oriented) steel from $588 million to $353 million, while the capacity limit has also been scaled down from 200,000 mt to 50,000 mt.
The easier terms are expected to encourage more applications for producing this grade of steel as no applications were received for the steel grade under PLI 1.0, the ministry said.
Another feature of PLI 1.1 is that it will allow applications from companies creating new facilities as well as augmenting existing facilities. While commitments to investment and incremental production would be as per the threshold set for each steel group, just 50 percent of the threshold investment will be allowed in the case of augmentation.
The tenure for production under the scheme will be FY 2025-26 to FY 2029-30, while the claims for incentives claim will range from the period from FY 2026-27 to FY 2030-31.
The product sub-categories that have been notified under the scheme include: coated/plated steel, high strength/wear resistant steel, speciality rods, alloy steel products and steel wires and electrical steel. The incentives will flow on achieving investment and committed production.