Context:

Recently, the Union Minister of Steel and Heavy Industries launched the second phase of the PLI scheme for Specialty Steel, termed as PLI Scheme 1.1. 

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The first round of the Production Linked Incentive (PLI) Scheme for Specialty Steel was notified in July 2021 by the Ministry of Steel with a budgetary outlay of ₹ 6,322 Crore. 

The revised version of the scheme, termed ‘PLI Scheme 1.1’ introduces relaxed norms to encourage greater industry participation. 

Key changes introduced in PLI Scheme 1.1 include reducing the threshold for investment and capacity requirements in certain sub-categories, such as Cold-Rolled Grain-Oriented steel (CRGO), permitting the carry-forward of excess production to subsequent years for claiming incentives, etc.  

• CRGO is a high-value steel used in the production of power transformers. 

The scheme will remain open for applications from January 6th to January 31^st, 2025 and will be implemented during the production period of FY 2025-26 to FY 2029-30.

Key Features of the Scheme

PLI Scheme 1.1 covers five (5) product categories in line with the existing PLI Scheme namely: - 

• Coated / Plated Steel Products, 
• High Strength / Wear-resistant Steel, 
• Specialty Rails, 
• Alloy Steel Products & Steel wires and 
• Electrical Steel. 

These above products have a wide range of applications, from white goods to transformers to Automobiles and other niche sectors. 

• White goods are large household appliances that are typically white. Ex: - Air conditioners, Dishwashers, Refrigerators, Washing machines, Ovens, etc. 

The scheme will operate within the funds originally allocated for the scheme, i.e., Rs.6,322 crore (in 2021).

Any company manufacturing specialty grades of steel in India can apply for the scheme. However, the input material must be melted or poured in India to ensure end-to-end production within the country.

Key Changes introduced: 

• Companies may not need to install new mills and those investing in upgrading existing capacities can also participate in the scheme.
• Presently, the technology to make CRGO is not available with any of the Indian steelmakers. However, considering the strategic importance of becoming atmanirbhar in CRGO, the new scheme reduces the threshold for investment and capacity creation to Rs.3,000 crore and 50,000 tonnes respectively, in order to increase the production of CRGO within the country.
• Companies can carry forward excess production in a sub-category to offset shortfalls in meeting their committed production for the following year.
• This ensures fair distribution of incentives, allowing companies to qualify for benefits even after a year of lower production following a strong performance. 

Significance of the Scheme

• The scheme will boost domestic manufacturing and reduce imports of value-added steel grades. 
• It will help the Indian steel industry improve its technology and move up the value chain. 
• It will further contribute to the goal of making India self-reliant (Atma Nirbhar Bharat) in the production of Specialty Steel.