The Steel Ministry has initiated a review of the PLI 1.0 scheme for the sector. Initial findings indicated that a third of the proposed investments cleared, that is, ₹10,000 crore out of ₹30,000 crore has materialised, and amongst the categories cleared for “some of the coated steel offerings” are likely to make way to the market next fiscal, senior officials aware of the findings told businessline.
According to officials, the Ministry has also reached out to companies who “did not sign the PLI 1.0 contracts” after being selected and is “trying to work out ways to bring them on board.”
“A third of the proposed investments under PLI 1.0 of the steel sector has materialised, our first review, which was carried out by end-September has revealed. The remaining are on track and there are some issues like environment clearances, slowing marking conditions for a particular product that has slowed some specific investment proposals. But, we are reviewing them and working on to see that they come on track,” the official said.
In fact, in some cases, Ministry officials carried out site visits to keep themselves abreast of the development and take a “real time view of the problems”.
“The first set of offerings under PLI, primarily coated steel – which India has been importing in large quantities – is expect by Q1FY25 or by H1FY25. Other products will follow too,” the official added.
PLI SCHEME SO FAR
The PLI scheme for the Ministry signed earlier this year saw 67 takers (companies) for speciality steel; over 50 MoUs have been inked, taking the investment proposals to approximately Rs 30,000 crore.
The internal note of the Ministry – which was documented in September – and was reviewed by businessline said, MECON, the project management agency for PLI 1.0 received 54 signed MOUs from 26 companies with an investment commitment of ₹29,285 crore and downstream capacity addition of 24.7 million tonnes (mt). Incremental production was 8.6 mt, and incentive outgo was around ₹2,300 crore.
Employment generation through the scheme was pegged at 55,000.
“MoUs have not been received in respect of 13 approved applications,” the note mentioned.
The problems pertain to land availability leading to delays, high cap-ex requirements or non-viability of substantial demand for a specific product in the Indian market. In some cases, lack of knowledge in the specific steel-making segment has also been cited as a reason to back out.
Three companies have backed out of their investment commitments, too. Commitments from them were received in making asymmetric rails, valve steel and tool, and die steel.
Some applicants have reportedly re-approached the ministry, pointing out that their investments in one particular category would be subject to clearances received in a corresponding or adjoining category (for which they have not been selected).
In one case, an applicant for a tin mill product said it would not go ahead with the proposed investment because of market volatility, while another applicant was reportedly reviewing the capacity, investment and incremental production commitment.
An applicant for asymmetric rails said it would not go ahead with the investment because of high cap-ex; while another applicant in the alloy steel category – for tool and die steel and valve steel – has withdrawn.
“So we are in talks some of these companies too. We want to understand the issues. For example., if we can help fast-track environment clearances; or may be put in a procurement commitment clause to bring back investment in some of these sub-categories where there are concerns,” the official explained.
If the applicants finally do not come on-board, then the next selected candidate could be looked at for passing on the PLI benefit or may be working on the scheme again in the second phase.