The Steel Ministry of India is reviewing the PLI 1.0 scheme, with $1.3 billion of the proposed $4 billion investment realized. This funding is paving the way for new steel products, including coated steel, to enter the market by the next fiscal year, despite some delays and withdrawals.
India's Steel Ministry is currently evaluating the performance of the Production-Linked Incentive (PLI) 1.0 scheme dedicated to the steel sector. Initial assessments show that only a third of the proposed investments, around $1.3 billion out of the planned $4 billion, have been actualized. Despite this, officials are optimistic, predicting that new categories of steel, notably coated varieties, are expected to be introduced to the market by the first half of the next fiscal year.
The ministry is actively engaging with companies that were selected for the scheme but did not sign the PLI 1.0 contracts. Efforts are underway to address their concerns and integrate them into the initiative.
The review conducted at the end of September revealed certain roadblocks, including environmental clearances and market conditions, which have slowed some investment proposals. Nonetheless, the ministry is intent on resolving these issues and ensuring that the planned investments stay on course.
Ministry officials have conducted site visits to gain a real-time understanding of the challenges faced by companies. This proactive approach is part of the ministry's strategy to facilitate the smooth progress of the PLI scheme.
So far, the PLI scheme has garnered significant interest, with 67 companies signing up and over 50 Memorandums of Understanding (MoUs) being executed. These agreements represent a total investment commitment of approximately $4 billion, with the potential to add around 24.7 million metric tons of steel capacity.
However, not all is going according to plan. Some companies have backed out due to various challenges, such as high capital expenditure requirements, lack of market viability for certain products, or gaps in technical expertise. Three firms, in particular, have reneged on their commitments in specialized steel segments.
The ministry remains in dialogue with these companies to understand their difficulties and explore solutions, including fast-tracking environmental clearances and possibly introducing procurement commitments.
If these companies do not proceed, the ministry may consider offering the PLI benefits to the next eligible candidates or revising the scheme in its second phase to better accommodate industry needs.
The Steel Ministry's review of the PLI 1.0 scheme has shed light on both the achievements and challenges within India's steel industry. With a portion of the investments materialized and new products on the horizon, there is a cautious optimism for the sector's growth. The ministry's commitment to addressing the concerns and encouraging investment is a positive sign for the industry's future development.