The Indian government has approved a corpus of around $854 million to be paid over a period of five years under its Production Linked Incentive (PLI) scheme for steel mills to increase production of specialty steel within the country, a government official said on Friday, July 23.
A statement issued by India’s Ministry of Steel said that the incentives to be paid under the PLI scheme are expected to catalyze an aggregate investment of $5.4 billion in creating additional specialty steel-making capacity of 25 million mt per annum.
Under the PLI scheme, the government would offer fiscal incentives ranging at 4-12 percent of the value of the incremental steel output achieved by a producer, over a period of five years.
The PLI scheme covers steel products like coated and plated steel, high-strength and wear-resistant steel, specialty steel rails, alloy steel products, steel wires and electrical grade steel like cold rolled grained oriented (CRGO).
The ministry said that currently domestic steel producers operate at the lower end of the value chain of steel and that the incentive scheme would enable the producers to move up the value chain and reduce India’s high import dependency on specialty grade steel products despite it being one of the largest producers of commodity steel products.
To ensure that the entire chain of value addition is done within the country, the government has stipulated that specialty steel production would need to use ‘steel melted and poured within the country’.