The government is actively working on the implementation of Production Linked Incentive (PLI) scheme 2.0 for the steel sector in 2024, as stated by Union Minister Faggan Singh Kulaste. The aim is to address concerns within the industry regarding increasing imports and high raw material prices amid geopolitical uncertainties, even as the demand for steel rises with robust economic growth.
After the impact of the coronavirus pandemic on the steel sector in 2020-21, both production and consumption of steel have shown a strong recovery. Cumulative crude steel production during the April-November period of the current year increased by 14.5% year-on-year to reach 94.01 million tonnes. Finished steel consumption also saw a significant annual growth of 14% to 86.97 million tonnes during the same period.
India has set an ambitious target of achieving an installed steel manufacturing capacity of 300 million tonnes by 2030, with the current capacity standing at around 161 million tonnes. Minister Kulaste emphasized the government’s commitment to the steel industry, mentioning the ongoing discussions about PLI 2.0 and efforts to ensure a stable supply of raw materials. The focus will also be on promoting the use of scrap and incorporating artificial intelligence and new technologies to boost steel output while reducing carbon emissions.
The government had earlier approved PLI scheme 1.0 to enhance the production of specialty steel, creating an additional capacity of approximately 25 million tonnes. Minister Kulaste anticipates significant growth in steel production and demand in 2024, particularly driven by infrastructure projects. The government is actively facilitating the expansion of steel players’ capacities by streamlining project clearances and engaging with state governments.
However, concerns persist within the industry, with the Indian Steel Association (ISA) expressing worries about surging imports and high raw material prices, especially from China and Vietnam. India relies on imports for 90% of its coking coal requirements, and efforts are underway to explore alternative sources. The ISA expects steel production to be in the range of 123-127 million tonnes in FY24.
The industry also faces challenges related to steel imports and calls for strong measures from the government to safeguard the domestic market. The government is actively considering the inclusion of refractories in the upcoming PLI scheme 2.0 for steel, aligning with the goal of doubling the country’s steel production capacity to 300 million tonnes by 2030.
Steelmakers, including state-owned SAIL and RINL, are urged to diversify their product mix to meet the growing needs of various sectors requiring steel. Despite challenges, Tata Steel notes green shoots of demand recovery, particularly in infrastructure spending and the auto sector. Other industry experts highlight the steel sector’s resilience in navigating economic fluctuations and disruptions through agile strategies and investment in research and development.