The Centre is looking to include refractories in the upcoming Production Linked Incentive Scheme 2.0 for steel as it aims at doubling the country’s production capacity for the metal to 300 million tonne by 2030, an official said.

Refractories are a critical input for steel production, and India depends on the import of the raw material.

The Ministry of Steel is currently in talks with the refractory industry to develop an incentive policy to boost domestic production and reduce the country's dependence on imports from China, an official said.

"The steel industry is a major user and consumer of refractories. Currently, 70 per cent of the refractory is consumed by the sector. The vision of doubling the steel capacity in the next 6-7 years requires focused attention on the development of the key raw material," Ministry of Steel Joint Secretary Abhijit Narendra said during a recent meeting with industry stakeholders in Kolkata.

Meanwhile, the country’s imports of finished steel rose 38 per cent YoY in April 2023 to 460,000 tonnes (0.46 mt), against 0.33 mt in April 2022. I

The PLI 2.0 scheme is expected to be announced soon, and “consultations are underway for inclusion of refractories”, he said.

Under the first PLI scheme, the government had approved ₹6,322 crore to give an impetus to the steel sector with an expectation of facilitating around ₹30,000 crore investment and additional capacity creation of about 25 million tonne of speciality steel over the next five years.

Refractories are materials used by the steel industry to line the internal furnaces for iron and steel making.

While the cost of refractory amounts to only 2-3 per cent of steel production, it is an essential component without which not a single tonne of steel can be produced, according to experts.

State-run SAIL Bhilai Steel Plant Director Anirban Dasgupta has called for the expansion of the refractory industry and collaboration with the steel sector for a joint mission to become self-reliant.

"The refractory industry has to expand in tandem and even at conservative estimates, the consumption of refractories for steel will be 2.5-3 million tonne by 2030 to see steel making getting doubled," Dasgupta said.

He also recommended the beneficiation of magnesite in India, which is “currently missing”, to reduce the refractory industry's dependence on single-source raw materials.

The ₹15,000-crore refractory sector is also passing through some challenges in sourcing raw materials and imports from China, an industry official said.

The objective of the PLI scheme is to boost domestic manufacturing and attract investments in identified sectors. The scheme provides financial incentives to companies that meet certain production and investment targets.