The Union government on Monday (February 9) launched the third round of its Production Linked Incentive (PLI) scheme for specialty steel, signing memorandum of understanding with 55 companies that have committed to invest Rs 11,887 crore in new downstream capacity by 2030-31.
Steel and Heavy Industries Minister H.D. Kumaraswamy and Minister of State Bhupathi Raju Srinivasa Varma underscored the need for companies to execute projects within agreed timelines. The scheme with a total outlay of Rs 6,322 crore aims to add about 26 million tonnes of specialty steel capacity over the next few years.
What did H.D. Kumaraswamy say?
“So far, the PLI scheme has attracted investment commitments worth Rs 43,874 crore…and is expected to add 14.3 million tonnes of new specialty steel capacity in India,” Kumaraswamy said.
The latest tranche, called PLI 1.2, represents the third round of incentives under the scheme and covers 85 projects across 22 product sub-categories, including steel grades for strategic sectors, commercial grades and coated wire products.
The Ministry of Steel said the round is targeted at steel segments where India remains dependent on imports, particularly in strategic, electrical and downstream applications.
The specialty steel PLI scheme was first cleared in 2021 to promote manufacturing, attract capital and support technology upgrades in downstream segments of the steel sector.
Under PLI 1.0, companies committed to invest Rs 27,106 crore with an expected 7.9 million tonnes of additional production capacity and 14,760 direct jobs. The second round, PLI 1.1 launched in January 2025, was expected to draw about Rs 17,000 crore in investment, generate around 16,000 jobs and add 6.4 million tonnes of capacity.
Scheme design modified for new round
For the new round, the government has modified the scheme design after reviewing the experience of the first two phases. Changes include lower investment and capacity thresholds, removal of mandatory annual incremental production rates, linking incentives to actual incremental production and revising the base year to 2024-25.
The third round offers incentive rates ranging from 4% to 15% for five years, starting in 2025-26, with payouts beginning in 2026-27. In total, across all three rounds, pledged investment under the specialty steel PLI scheme now exceeds Rs 44,000 crore, with the government having disbursed Rs 236 crore in incentives so far.
Steel Secretary Sandeep Poundrik urged the players to stick to the timeline and avail the benefits of the scheme which provides incentives on production of special steel grades. He said the timeline of scheme will is not going be extended further.
Poundrik said India’s installed steel capacity is currently 218 million tonnes per annum (mtpa), rising by 18 mtpa in the current fiscal itself. He also noted the country will comfortably achieve the target of having 300 mtpa installed steel manufacturing capacity in 2031, and maybe 400 mtpa by 2035-36.