India prepares PLI phase 2 for steel sector growth

The Indian government is actively developing a follow-up to the performance-linked incentive (PLI) program aimed at the steel sector, with a primary emphasis on import substitution. Nagendra Nath Sinha, the steel secretary, revealed that the steel ministry is poised to introduce PLI-2, which will address the specific requirements of sectors like the Indian Railways. During the initial phase of the PLI scheme, companies committed to investing ₹2.953 billion, resulting in a downstream capacity increase of 24.78 million tonnes. The government has allocated ₹6.32 billion for providing incentives to the steel industry through the PLI initiative.Anticipating visible results from 2026, Sinha responded to queries about the demand for steel products by the Indian Railways and the necessity for imports to fulfil these needs. To cater to the railway's special grade requirements, agreements have been inked by the Steel Authority of India Ltd (SAIL) for asymmetric and hardened rails.SAIL, a state-run enterprise, currently fulfils the entire demand for R-260 grade steel rails of the national transporter. Furthermore, the introduction of a new head-hardened rail grade, R-350/1175, is projected for 2023, enhancing train speed. Despite its crucial role in infrastructure development, the domestic steel sector encounters rail rake shortages during peak power demand months due to coal transportation.In response, the steel secretary outlined new initiatives aimed at improving freight traffic and addressing the steel sector's needs. Over 2,000 wagons are being introduced monthly to enhance wagon availability. Additionally, newer steel grades for containers, authorized by the Bureau of Indian Standards, have been embraced by leading steel producers such as SAIL, Tata Steel, and JSW Steel.The PLI-2 initiative aligns with India's strategic intent to bolster domestic manufacturing, reduce imports, and advance self-reliance in critical sectors.