Third Round of PLI Scheme Strengthens India’s Steel Sector

Context:

• In November 2025, Union Minister H.D. Kumaraswamy, Ministry of Steel (MoS), launched the third round (PLI 1.2) of the Production Linked Incentive (PLI) Scheme for Specialty Steel.

• The initiative aims to boost domestic production of high-value, advanced specialty steel, reduce imports, and strengthen India’s position as a global steel manufacturing hub under Atmanirbhar Bharat.

Key Highlights:

• About PLI Scheme for Specialty Steel:

  • Approved in July 2021 by Union Cabinet.

  • Total outlay: ₹6,322 crore.

  • Implementation period: FY24 to FY30.

  • Implementing Ministry: Ministry of Steel (MoS).

  • Project Management Agency (PMA): MECON Limited

• Achievements So Far (PLI 1.0 & 1.1):

  • Committed investment: ₹43,874 crore.

  • Direct jobs created: 30,760.

  • Targeted output: 14.3 million tonnes (MT) of specialty steel.

  • As of September 2025: ₹22,973 crore invested; 13,000+ jobs generated.

• Features of PLI 1.2:

  • Application window: 30 days from launch (online via MECON portal).

  • Eligibility: Indian-registered companies engaged in end-to-end manufacturing.

  • Covers 22 product sub-categories under 5 clusters:

    • Super alloys & titanium alloys

    • CRGO steel

    • Alloy & stainless steel

    • Coated steels

    • Alloy forgings

  • Incentive rate: 4% to 15% based on product and value addition.

  • Incentive period: 5 years from FY26; disbursement from FY27.

  • Base year updated to FY25 (from FY20).

• National Steel Targets:

  • 300 MT steel capacity by 2030.

  • 500 MT by 2047.

  • Domestic demand growing at 11–13% annually.

  • Steel production grew 14.1% (Sept 2025 YoY).

• Significance:

  • Reduces dependency on imported specialty steel.

  • Strengthens infrastructure and defence manufacturing.

  • Encourages high-value manufacturing and exports.

Relevant Prelims Points:

• Issue & Background:

  • India is the world’s second-largest steel producer but imports high-grade specialty steel.

  • Specialty steel is used in: defence, automobiles, renewable energy, railways, and infrastructure.

• PLI Scheme – Core Concept:

  • Government provides financial incentives based on incremental production.

  • Objective: Boost domestic manufacturing, exports, and employment.

• Key Facts about Specialty Steel PLI:

  • Approved in July 2021.

  • Outlay: ₹6,322 crore.

  • Incentives: 4%–15%.

  • Implementation period: FY24–FY30.

• Benefits / Importance:

  • Supports Make in India and Atmanirbhar Bharat.

  • Enhances technological capability in advanced alloys.

  • Strengthens supply chain resilience.

• Challenges / Risks:

  • Global steel price volatility.

  • Carbon emissions and environmental concerns.

  • Competition from low-cost steel producers globally.

• Impact (India + Global Market):

  • Enhances India’s competitiveness in global specialty steel trade.

  • Contributes to infrastructure-led growth.

Relevant Mains Points:

• Core Concept / Static Linkage:

  • Industrial policy reforms and manufacturing-led growth.

  • Import substitution and value chain integration.

  • Role of steel in economic development and infrastructure expansion.

• Governance / Institutional Dimensions:

  • Ministry of Steel as nodal authority.

  • Role of MECON Limited as PMA.

  • Alignment with National Steel Policy 2017.

• Economic & Environmental Dimensions:

  • Rising domestic demand due to infrastructure expansion.

  • Steel sector contributes significantly to GDP and employment.

  • Need for green steel transition and decarbonization technologies.

• Keywords for Answer Writing:

  • PLI Scheme

  • Specialty Steel

  • Atmanirbhar Bharat

  • Import Substitution

  • Industrial Competitiveness

  • Green Steel

• Way Forward:

  • Promote green hydrogen use in steel production.

  • Encourage R&D in advanced alloys and high-strength materials.

  • Strengthen export incentives and trade agreements.

  • Integrate environmental sustainability with capacity expansion.

  • Facilitate MSME participation in steel value chains.

UPSC Relevance (GS-wise):

• GS3: Industrial policy, infrastructure, manufacturing sector, energy & environment.

• GS2: Government policies and interventions for economic development.

• GS4: Ethical responsibility in balancing industrial growth and environmental sustainability.