Delay in steel PLI scheme roll out irks NITI Aayog, Cabinet Secretary

New Delhi, June 30 The NITI Aayog has “expressed deep concern” over the delay in rolling out the production-linked incentive (PLI) scheme for speciality steel while observing a “one and a half year” hold back has “defeated the purpose”.

On the other hand, the Cabinet Secretary too “took a serious view of the delay” pointing out the change in scheme guidelines cannot be “an unending process”, minutes of a meeting accessed by BusinessLine show.

The Empowered Group of Secretaries (EGOS), which met earlier this month, observed the Steel Ministry “may revisit” proposals to make changes while taking into considerations concerns raised by other Ministries.

The steel PLI scheme has seen at least four extensions for want of appropriate takers; from March 2022, the last date was extended then to May and again till June-end. On Thursday, it was further extended by a month, to July 31.

Defeats purpose

The then NITI Aayog CEO, who was present, pointed out that spirit of PLI scheme was to create global champions in specific categories and take advantage of realigning value chains. However, the “delay of more than one and half year has defeated the purpose.”

“The Ministries were given powers to formulate guidelines. The Steel Ministry has been unable to roll out scheme and is still contemplating changes in guidelines,” he said.

“Taking a serious view of delay in rolling out this scheme, the Cabinet Secretary observed that changes in scheme guidelines can’t be an unending process. (The) scheme guidelines cannot accommodate the views of every stakeholder,” the minutes noted.

Explanation for delay

According to Steel Ministry officials, “certain changes are proposed” to simplify scheme’s guidelines. Only four applications were received till March 31. Stakeholders, including other ministries, communicated their requirements for additional product categories to be covered too.

Certain sectors that were opened for private participation during the Budget were required to be addressed.

“Ministry has also received representation from the industry regarding simplifying the process of participation and evaluation, easing participation of secondary steel industries,” it was reportedly pointed out to the EGOS meeting.

Modifications proposed

Accordingly, the Steel Ministry has proposed modifications that include addition of product sub-categories; simplifying eligibility and application submission; evaluating incentive provisions and bringing in two slabs of incentives instead of three, among others.

Modifications would make it easier for secondary steel makers to participate. Proposals have been made to modify investment threshold for integrated steel plants and the same be “done away” for secondary steel-makers. Replacement of y-o-y threshold for incremental production with CAGR was proposed.

Date of commissioning of new unit was to be after July 29, 2021 “to qualify as investment under PLI”.

Observations

However, the Secretary of Department of Economic Affairs and Secretary Ministry of Textiles had in the meeting observed that some commercial items such as head hardened rails and auto grade steel have been “put under strategic category”, having higher rates of incentive.

Removal of threshold limit for investment and dispensing with the ranking system “needed re-examination”, it was pointed out.

“The Secretary, Ministry of Textiles, observed that date of commissioning of new unit facility after date of notification of scheme as criterion for permissible investment needs re-examination,” it was noted in the Minutes of the Meeting.

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