WTO SCRUTINY OF INDIA’S PLI SCHEME FOR STEEL

GS-2: International Institutions

Key Points:

• The U.S. questioned India’s Production Linked Incentive (PLI) scheme for speciality steel at the WTO, citing trade rule concerns.
• India defends the scheme as essential for reducing imports and boosting self-reliance.
• India remained a net steel importer in FY25.
• The ₹6,322 crore scheme is modest compared to China’s $50 billion steel subsidies.

In-Depth Analysis:

• Issue:
  • U.S. claims the PLI scheme distorts global steel markets.
  • India argues it addresses import dependency, not global oversupply.
• PLI Objectives (Steel):
  • Launched in 2021 with ₹6,322 crore for steel.
  • Aims to produce high-grade steel, reduce imports, and attract investment.
• WTO Compliance:
  • No export obligations, aligning with WTO rules.
  • Incentives tied to domestic production and sales.

Technical Concepts:

• Speciality Steel: High-grade steel for aerospace, defense, and EVs.
• PLI Scheme: Subsidies based on incremental production to promote domestic manufacturing.

Importance:

• Enhances strategic autonomy in critical sectors.
• Asserts India’s industrial policy within WTO norms.

Reflects tensions between national policies and global trade rules.