Production Linked incentive scheme for steel subsidy for steel manufacturing

Production Linked Incentive (PLI) Scheme for Specialty Steel

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Objectives of PLI Scheme for Specialty Steel

The objective of PLI scheme for ‘speciality steel’ is to promote manufacturing of specialty steel grades within the country by providing financial incentives. Presently the country operates at the low end of value chain in steel manufacturing subsidy for steel manufacturing

The PLI incentive is expected to boost the domestic production of specialty steel by,


• attracting significant investment
• infusing technology and know-how
• promoting exports.

The total outlay will be ₹6,322 crore.

Incentive under the scheme will be provided for a maximum period of five (5) years.
The first incentive will be payable from 2023-24 based on the commercial production of 2022-23.   

The scheme covering Specialty steel grades shall be applicable for the following five (05) indicative product categories:
i. Coated/Plated Steel Products
ii. High Strength/ Wear resistant Steel
iii. Specialty Rails
iiii. Alloy Steel Products and Steel wires
v. Electrical Steel

Eligibility

A company registered in India under the companies Act 2013, that is engaged in manufacturing of the identified “Specialty steel” grades, subject to the input material being melted and poured within the country using iron ore/scrap/sponge iron/pellets etc. shall be eligible to apply for incentive under the scheme. End to end manufacturing will thus take place within the country.

Scheme Benefits

 Baseline (2019-20)  Projected (2026-27)  In %
VolumeValueVolumeValue
(Million tonnes)(Rs. Cr)(Million tonnes)(Rs. Cr)
Production17.697,28742.22,42,838140%
Import3.729,2560.97355-76%
Export1.69,4745.533,024244%

• Projected production of the identified ‘specialty steel’ grades is expected to more than double by 2026-27. (Baseline production is 17 million tonnes, projected production is 42 million tonnes).
• Projecte export (in volume) is look for to become more than 3 times the present volume.
• import (in volume) is to reduce by 4 times.
• An expected investment of ₹39,625 crore by 2029-30 in ‘specialty steel’.

Calculation

Incentive is calculated based on the incremental production which is multiplied by the incentive slab as applicable and the weighted average sales price of the product. For example,
A = Incremental sales in current year with reference to previous year or the base year whichever is higher

B = Weighted Average sale price (net of taxes) in current year
C = Weighted Average sales price (net of taxes) in the base year (2019-20)
Incentive = (A/B) x (B or C, whichever is lower) x (PLI rate as applicable)/100
*Current year means the year for which PLI has been claimed.

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