India announced incentives worth Rs 6,322 crore to boost domestic production of high grade specialty steel used in automobiles to home appliances.
The government will offer production-linked incentives for five years from 2023-24 to 2027-28, according to a media statement on PIB. The scheme would cover coated/plated steel products, high strength/wear resistant steel, specialty rails; alloy steel products, steel wires and electrical steel.
The PLI scheme, it said, will bring in investment of about Rs 40,000 crore and capacity addition of 25 million tonnes. It has an employment generation potential of about 5.25 lakh, of which 68,000 will be direct and the rest will be indirect.
Value-added steel grades are largely imported in India. That, according to the PIB statement, is because domestic high grade steel is $80-100 per tonne costlier than the imported steel on account of higher logistics and infra cost, higher power and capital cost and, taxes and duties.
The objective of the PLI scheme for specialty grade steel, the statement said, is to address this disability by incentivising production within the country. The scheme proposes to incentivise eligible manufacturers by paying 4-12% incentive on incremental production.
The PLI scheme for specialty steel is a good effort to reduce imports, Rakesh Arora, managing partner at Go India Advisors, told BloombergQuint. But the incentives on offer are too low and that too limited per company, making the scheme not so attractive for large steelmakers. Smaller steel producers such as Jindal Steel & Power Ltd. and Jindal Steel Hisar might benefit more, he said.
JSW Steel and Jindal Steel didn’t immediately respond to BloombergQuint’s emailed queries.