Union Minister for Steel and Heavy Industries H.D. Kumaraswamy launched the third round of the Production Linked Incentive (PLI 1.2) Scheme for Specialty Steel on November 4, 2025. The scheme offers incentive rates between 4% to 15% based on product type, with a five-year incentive period starting from FY 2025–26. Notably, the base year has been updated from FY20 to FY25, making it more relevant and accessible for new applicants. The PLI scheme for Specialty Steel was originally launched in 2021 under the ₹6,322 crore outlay and aims to boost domestic production of high-value specialty steel used in defence, automotive, railways, energy, and aerospace. India is the world's second-largest steel producer but remains dependent on imports for high-grade specialty steel varieties. The scheme is expected to attract investments, enhance domestic manufacturing capabilities, and reduce import dependency for critical steel grades.
PLI 1.2 Scheme for Specialty Steel Launched by Union Minister H.D. Kumaraswamy; Third Round with Updated Base Year FY25
Union Minister for Steel and Heavy Industries H.D. Kumaraswamy launched the third round of the Production Linked Incentive (PLI 1.2) Scheme for Specialty Steel on November 4, 2025. The scheme offers incentive rates between 4% to 15% based on product type, with a five-year incentive period starting from FY 2025–26. Notably, the base year has been updated from FY20 to FY25, making it more relevant and accessible for new applicants. The PLI scheme for Specialty Steel was originally launched in 2021 under the ₹6,322 crore outlay and aims to boost domestic production of high-value specialty steel used in defence, automotive, railways, energy, and aerospace. India is the world's second-largest steel producer but remains dependent on imports for high-grade specialty steel varieties. The scheme is expected to attract investments, enhance domestic manufacturing capabilities, and reduce import dependency for critical steel grades.
Key facts
- Union Minister Kumaraswamy launched PLI 1.2 Scheme (3rd round) for Specialty Steel on November 4, 2025.
- Incentive rates range from 4% to 15% based on product type over a five-year period from FY 2025-26.
- Base year updated from FY20 to FY25, making the scheme more relevant for new applicants.
- Original PLI for Specialty Steel launched in 2021 with ₹6,322 crore outlay.
- India is world's second-largest steel producer but depends on imports for high-grade specialty steel.
- Scheme targets steel used in defence, automotive, railways, energy, and aerospace sectors.
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Practice MCQ from this story
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In the PLI 1.2 Scheme for Specialty Steel launched in November 2025, the base year for prices was revised from FY 2019-20 to which financial year?
The Ministry of Steel's PIB release on the third round of the PLI Scheme for Specialty Steel states that the base year for prices was revised from 2019-20 to 2024-25 to reflect current trends. The scheme's benefits are available for up to five years starting from FY 2025-26, but the revised base year for prices is FY 2024-25.
Source: PIB / Business Standard
Frequently asked questions
What is the PLI 1.2 Scheme for Specialty Steel, and what makes the third round (launched November 2025) different from earlier rounds?
The PLI 1.2 Scheme is the Production Linked Incentive scheme for Specialty Steel offering incentive rates of 4% to 15% over five years. The third round (launched November 6, 2025) is distinct primarily because the base year has been updated from FY20 to FY25, making eligibility and incremental production calculations far more realistic and accessible for new applicants.
Why does India depend on imports for specialty steel despite being the world's second-largest steel producer?
India is the world's second-largest steel producer overall, but lacks sufficient domestic capacity for high-grade specialty steel — such as electrical steel, alloy and tool steel, and high-strength structural steel — which requires advanced manufacturing technology and tighter quality controls. As a result, India imports these grades from countries like Japan, South Korea, and China.
Which sectors does the PLI scheme for Specialty Steel target, and why are these sectors strategically important?
The scheme targets specialty steel used in defence, automotive, railways, energy, and aerospace sectors. These are strategically important because they are central to India's Aatmanirbhar Bharat agenda and national security — reducing import dependence in these sectors directly strengthens strategic autonomy.
What was the original outlay of the PLI scheme for Specialty Steel launched in 2021, and what is the incentive rate range?
The original PLI for Specialty Steel was launched in 2021 with a financial outlay of ₹6,322 crore. The incentive rates under the scheme range from 4% to 15% depending on the product category, applied over a five-year period starting from FY 2025–26 for the third round.
How does changing the base year from FY20 to FY25 benefit new applicants to the PLI scheme?
The base year determines the production benchmark against which incremental production (and thus incentive payout) is measured. Shifting from FY20 to FY25 as the base year means companies are compared to more recent production levels, making it easier for firms that scaled up between 2020 and 2025 to qualify and earn incentives on genuinely new incremental capacity.
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