SPECIALTY STEEL UNDER PRODUCER LINKED INCENTIVE SCHEME

SPECIALTY STEEL UNDER PRODUCER LINKED INCENTIVE SCHEME

CONTEXT:

Recently, Government started taking applications for specialty steel and has fixed the deadline for investors looking to invest under the Producer Linked Incentive Scheme (PLI).

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• Earlier the Prime Minister had approved 6,322 crore PLI Scheme to boost production of Specialty Steal in India and also attract an additional investment of about 40,000 crore and generating additional employment opportunities.

WHAT IS PRODUCER LINKED INCENTIVE SCHEME?

• PLI scheme has been launched under the aegis of Aatma Nirbhar Bharat to give a boost to domestic industries through a slew of measures such as incentives, subsidies and funding support. This will further promote Ease of Doing Business in India.

• Even though the state governments had been providing the incentives to industries however, Central Government has increased their prominence due to –
  • Widening the coverage of central government’s incentives to additional sectors for holistic growth
  • Creation of a large-scale domestic manufacturing ecosystem across priority sectors.
• Basis of PLI Scheme:
  • Outcome-based and result oriented – This means that incentives will be disbursed only after production has taken place in the country.
  • Linking incentives to output: The calculation of incentives will be based on incremental production to be achieved at a high rate of growth. To achieve this incremental production, beneficiaries will be required to make additional investments in establishing green-field facilities or carrying out expansion of existing facilities.
  • Creating ‘champions’ to maximize impact: The scheme focuses on size and scale by selecting those players who can deliver on volumes. The targeted nature of the scheme will make it highly effective and the beneficiaries are likely to become globally competitive.
  • Selection of sectors has solely been based on its scope to cover cutting-edge technology, integrate with global value chains and create large-scale employment.
• The scheme has been approved for 14 key sectors to achieve following –
  • Make domestic manufacturing globally competitive,
  • To create global champions in manufacturing,
  • To boost existing capacities in domestic manufacturing for sunrise and strategic sectors,
  • Curb cheaper imports,
  • Reduce import bills,
  • Improve cost competitiveness of domestically manufactured goods,
  • Enhance export capacity, and
  • Generate employment
• Key sectors under PLI scheme– Key Starting Materials (KSMs)/Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs), Large Scale Electronics Manufacturing, Manufacturing of Medical Devices, Electronic/Technology Products, Pharmaceuticals drugs, Telecom & Networking Products, Food Products, White Goods (ACs & LED), High-Efficiency Solar PV Modules, Automobiles & Auto Components, Advance Chemistry Cell (ACC) Battery, Textile Products: MMF segment and technical textiles, Specialty Steel and Drones and Drones components.

SPECIALTY STEEL

• Specialty steels also referred to as alloy steel contains additional alloyed materials that deliver special properties to the final product.
• Specialty steels are engineered to provide superior performance under specific conditions. Various stainless-steel alloys are included among common specialty steels.
• What are the benefits of specialty steels?
  • The benefits of specialty steels include:
  • High corrosion resistance
  • Targeted resistance to high and/or low temperatures
  • Easily fabricated
  • Dimensional stability and strength
  • Non-magnetic
  • Sterile and hygienic
  • Well suited for special applications
  • Lighter weight
• Specialty steel is used for parts or manufacturing and maintenance components in various applications, from automobiles and other transportation equipment essential in modern society to daily home appliances and smartphone and other precision equipment.

PLI FOR SPECIALTY STEEL

• This scheme aims to help India’s SS production reach 42 Million Tonnes (MT) by 2026-27.
• Categories: There are five categories of specialty steel which have been chosen in the PLI Scheme:
  • Coated/plated steel products.
  • High strength/wear resistant steel.
  • Speciality rails.
  • Alloy steel products and steel wires.
  • Electrical steel.
• Slabs: There are three slabs of PLI incentives, the lowest being 4% and highest being 12%.
• Beneficiaries: Both big players i.e. integrated steel plants and to the smaller players (secondary steel players).
  • Any company registered in India, engaged in manufacturing of the identified ‘specialty steel’ grades will be eligible to participate in the scheme.
• Reason for choosing Specialty Steel:
  • To Increase Production:
    • Specialty Steel S has been chosen as the target segment by the government because out of a production of 102 million tonnes of steel in 2020-21, only 18 million tonnes of value-added steel/speciality steel were produced in the country.
  • To Reduce Imports:
    • Most of the imports into India are in the value-added and specialty segment. The PLI scheme will boost manufacturing capacities by Indian mills in this segment and MSMEs will be able to source from them directly.
    • Out of 6.7 million tonnes of imports of steel in 2020-21, approximately 4 million tonnes were of speciality steel, resulting in Foreign Exchange (Forex) outgo of approximately Rs 30,000 crore.
  • Sector in Uptrend:
    • The steel sector is on an uptrend and major integrated producers have lined up major expansion plans.