The Indian government is set to unveil PLI Scheme 1.1 for the steel industry, aimed at further promoting domestic steel manufacturing. The scheme will be launched by Union Minister of Steel and Heavy Industries H.D. Kumaraswamy at an event in Vigyan Bhavan, New Delhi, on January 6, 2025. The government’s move is expected to enhance production, reduce dependency on imports, and make India a global hub for high-quality specialty steel.
PLI Scheme: An Overview
The Production-Linked Incentive (PLI) scheme was introduced in 2020 to encourage domestic manufacturing across various sectors and reduce reliance on imports. The scheme initially covered three sectors but was later extended to include steel in November 2020. Since its inception, the PLI Scheme for Steel has attracted an investment commitment of Rs 27,106 crore, creating 14,760 jobs and generating an estimated production capacity of 7.9 million tonnes of specialty steel used in industries such as aerospace, defense, power, and automotive.
As of November 2024, participating companies have already invested Rs 18,300 crore and created over 8,660 jobs under the existing scheme.
Why PLI Scheme 1.1?
The Ministry of Steel noted that feedback from stakeholders indicated a need to revise the scheme to encourage broader participation. The PLI Scheme 1.1 will address the concerns of the industry and provide more incentives for companies to upgrade their facilities and expand production.
The ministry is also preparing a Green Steel Mission, aimed at making India a leader in sustainable steel production. The mission will include a PLI scheme for green steel, incentives for using renewable energy, and government mandates to procure eco-friendly steel.
Green Steel Mission: Reducing Carbon Emissions
In line with India’s Net Zero Carbon Emissions Target, the government is working on a Green Steel Mission, estimated to cost Rs 15,000 crore. The mission focuses on reducing the carbon footprint of the steel industry by:
- Encouraging the use of renewable energy
- Promoting the production and consumption of green steel
- Supporting the National Green Hydrogen Mission
The National Green Hydrogen Mission, launched by the Ministry of New and Renewable Energy (MNRE), integrates the steel sector into the broader green energy framework. The steel sector has been allocated a budget of Rs 455 crore for pilot projects aimed at using green hydrogen in steel production.
Pilot Projects for Green Hydrogen in Steel Production
The Ministry of Steel has already awarded three pilot projects to test the use of green hydrogen in steel production:
- Direct Reduced Iron (DRI) using 100% hydrogen in vertical shaft furnaces
- Using hydrogen in blast furnaces to reduce coal and coke consumption
- Injecting green hydrogen into existing DRI units to partially replace natural gas
These projects are expected to help the steel sector transition toward sustainable production methods and reduce its carbon emissions.
India’s Steel Global Outlook Strategy
To position India as a global leader in the steel industry, the government is formulating a Steel Global Outlook Strategy focusing on:
- Raw materials
- Investments
- Technologies
- Steel exports
A Working Group has been formed to develop this strategy, which will outline priority countries for cooperation and establish action plans for collaboration.
Green Steel Taxonomy and Recycling Policy
In December 2024, the government released the Taxonomy for Green Steel, which sets standards for defining and categorizing low-emission steel. The taxonomy aims to:
- Create a framework for green steel production
- Establish a market for green steel
- Provide financial support for companies transitioning to sustainable practices
Additionally, the government’s Steel Scrap Recycling Policy seeks to increase the availability of domestically generated scrap, promoting resource efficiency and reducing the dependency on imported raw materials.
PLI Scheme 1.1: Key Takeaways
- Launch Date: January 6, 2025
- Objective: Boost specialty steel production, reduce import dependency, and promote green steel initiatives
- Investment Commitment So Far: Rs 27,106 crore
- Jobs Created: 14,760
- Green Steel Mission Budget: Rs 15,000 crore
Conclusion
The PLI Scheme 1.1 marks a significant step forward in India’s steel industry. By encouraging the production of specialty steel and promoting the adoption of green technologies, the government aims to strengthen India’s position as a global steel leader. With a focus on sustainability and innovation, the steel industry is poised to play a crucial role in India’s economic growth and its journey towards net zero carbon emissions.