India relaunches Production-Linked Incentive Scheme

The Indian government is set to announce the revamped Production-Linked Incentive (PLI) scheme, titled "PLI Scheme 1.1," on January 6. The initiative, to be introduced by Steel Minister H. D. Kumaraswamy, aims to encourage domestic manufacturing and increase investments in special steel manufacturing.

Specialty steel, a high-quality material used in strategic sectors such as defense, automotive, and electrical, remains central to India's efforts to reduce import dependency. Initially launched in November 2020, the PLI scheme was designed to address disruptions in global supply chains caused by the COVID-19 pandemic. However, due to limited participation in the first phase, the government decided to restructure and relaunch the program.

Results of the initial PLI Scheme

The first PLI scheme attracted investment commitments worth INR 27,106 crore (approximately 3.26 billion USD). These investments targeted the production of 7.90 million tons of specialty steel and the creation of 14,760 direct jobs. By November 2024, participating companies had already invested INR 18,300 crore (approximately 2.2 billion USD) and created over 8,660 jobs.

Recognizing the potential for further participation, the government engaged with stakeholders to identify gaps and opportunities. PLI Scheme 1.1 aims to encourage additional investments and enhance India’s specialty steel production capacity.

Strategic importance of the PLI scheme

Production-linked incentives were introduced in 2020 to promote local manufacturing and reduce reliance on imports. Initially covering only three sectors, the scheme was later expanded to include steel, given its strategic importance.

Specialty steel production remains a critical area for India’s national priorities. With PLI Scheme 1.1, the government seeks to establish a more effective incentive mechanism to meet its production goals in this segment.

The new scheme is expected to strengthen India’s high-quality steel manufacturing capabilities and support growth in industrial sectors reliant on domestic resources. PLI Scheme 1.1 marks a significant step toward achieving self-reliance in strategic materials for the country.