PLI Scheme (PLI 1.2) for Specialty Steel

The scheme pays a percentage of the value of incremental production derived from sales of notified specialty steel sub-categories. Investment matters only as a qualifying gate — it determines whether you are eligible and how large a claim you may make — but the money itself is earned on tonnes sold, valued at a capped price.

Tenure and the Year Map

Target Segments and Quality Standards

The scheme applies to the product sub-categories at Annexure I. Steel products under the target segments that fall under a Quality Control Order must necessarily comply with Indian Standards. Other covered products must comply with acceptable relevant national or international standards — IS, BS, ASTM, ISO, DIN, JIS and the like — and standards issued by the concerned Government of India authorities, or, where no national or international standard exists for a sub-category, an end user's certificate. For strategic sectors, the end user certificate must be certified by the authorised signatory that the grades under the applied sub-category are used by the end user as required; strategic sectors cover defence, space, aerospace, atomic energy and power.

Positive Conditions

• •A company registered in India under the Companies Act 2013, proposing to manufacture goods covered in Annexure I.
• •End-to-end domestic manufacturing of the applied sub-category, with input material melted and poured within the country using iron ore, scrap, sponge iron or pellets.
• •A maximum of 20% of the total value addition may be undertaken through third parties — but the incentive can only be claimed by the company that has manufactured the end product sub-category.
• •Net worth, including that of group companies, of not less than 30% of the total committed investment. The audited net worth reported in the financial year immediately preceding the date of application is taken. For a company or group company incorporated after 31 March 2025, net worth must be at least 30% of total committed investment prior to the date of filing. Where an applicant applies in multiple sub-categories, the net worth test is applied against the total committed investment across all applied sub-categories.
• •Minimum thresholds of annual incremental production rate, unit capacity and investment are sub-category specific and are set out at Annexure I.

Disqualifications

• •A company whose accounts are declared NPA as per RBI guidelines, or which is a wilful defaulter, or is reported as fraud by any bank, financial institution or NBFC.
• •A company against which insolvency proceedings have been admitted in the NCLT.
• •A project of a company in receipt of, or expected to receive, incentive under the previous rounds of the PLI Scheme for Specialty Steel is not eligible for the current round. Production and facilities created through committed investment under PLI 1.0 and 1.1 for which an MoU has been signed shall not form part of the PLI 1.2 application, and the resulting production shall not be claimed here.

Stacking With Other Benefits — What Is And Is Not Permitted

1. 1One application per sub-category: The Annexure II form is submitted to the PMA through the online portal within 30 days of the launch of PLI 1.2. Only one product sub-category per application is permitted — a separate application form is required for each sub-category applied for. The form is filled in English, all monetary figures in INR, no field left blank, documents uploaded in PDF.
2. 2Physical set to the PMA: After successful online submission, the applicant must print all documents, have them signed by the authorised signatory and send the full set to the PMA within 15 days of the online submission.
3. 3Correction window: A 15-day correction window opens after closure of the submission window and PMA scrutiny — available only for completeness of supporting documents uploaded with the form, not for revising the application itself.
4. 4PMA scrutiny, ranking and recommendation: The PMA generates a unique application ID as acknowledgement, examines and processes applications, verifies eligibility and ranks applicants as per the selection criteria, and recommends approval to the Competent Authority. It may seek additional information and may carry out physical inspection of manufacturing units and offices through site visits — the applicant is bound to extend all support.
5. 5Approval and MoU: The Competent Authority — the Minister of Steel or his delegate — approves the selected companies. Each selected company then signs an MoU with the Ministry of Steel, valid till the final year of PLI disbursal, adhering to the commitments given at selection.
6. 6Performance security: 0.5% of the committed investment by way of Bank Guarantee in the Annexure X format, submitted along with the MoU. A separate performance security is required against each applied product sub-category, valid throughout the scheme period. The guarantee is payable without demur within five bank working days of written demand, is unaffected by any dispute raised by the applicant, and the Annexure X format runs till 31 March 2031, with jurisdiction at the Courts at New Delhi.
7. 7Consent to audit: Each selected company submits an undertaking consenting to audit of its manufacturing facilities or offices for verification of the information and data submitted with the application.

What the Applicant Commits To in the Form

Beyond the eligibility declarations, Annexure II extracts a set of forward commitments that later become the yardstick for clawback: committed annual production for each year from FY 2025-26 to FY 2029-30; unit-wise committed investment split between investment made before and after the date of notification of PLI 1.2; year-wise phasing of investment; unit location, land acquisition status, statutory clearances such as EC, water linkage, power linkage and factory clearance; implementation period and expected month and year of commissioning; feasibility report and financial closure with the equity-debt split; and a year-wise employment generation plan across on-roll, contractual and apprentice categories from FY 2024-25 to FY 2029-30.

Documents to Be Uploaded With the Application

Historical net sales data for all saleable products, category and sub-category wise, split between export and domestic, is required separately for FY 2022-23, FY 2023-24 and FY 2024-25. Net sales here means gross sales net of credit notes raised for any purpose, discounts of every kind including cash, volume, turnover and target discounts, taxes, and freight and insurance as applicable.

The table below merges Annexure I (incentive slab, minimum capacity and minimum investment) with Annexure IV (reference weighted-average price for base year 2024-25). Read across a row and you have both the entry gate and the price cap that will govern the claim.

Steel Grades for the Strategic Sector

Commercial Grades — Category 1

Commercial Grades — Category 2

Coated and Wire Products

Which Technological Facilities Are Permissible, By Sub-Category

Annexure III classifies production into four stages — for steel, ironmaking, steelmaking, shaping & finishing, and downstream processing; for super alloys and titanium alloys, raw material processing, melting, shaping & finishing, and downstream processing. The permissible technological facilities for each sub-category are pegged to a stage range:

The guidelines describe this as an indicative list of major facilities only, and note that actual investment for a given sub-category may or may not include facilities from every stage mentioned.

The "whichever is lowest" operator is the quiet centre of this scheme. If the applicant's realisation rises above the notified base-year price, the incentive is still computed at the base-year price — the Government does not pay more because the market moved. If realisation falls below it, the lower actual price applies. The base-year price at Annexure IV is therefore a ceiling, not a benchmark to be beaten.

Eligible Incremental Production, By Scenario

The maximum production quantity for claiming incentive during the entire scheme tenure is limited to the committed capacity.

PLI Rates by Slab and Year

The Cap

The scheme is expressly fund limited. The annual incentive payable is capped at ₹200 crore per eligible company, including group companies, across all product categories for this round. Separately, the EGoS is charged with ensuring that the total amount of incentive payable does not exceed the financial outlay indicated in the scheme document, irrespective of the number of applicants across target segments.

Timelines

Deemed Investment

All investment must be completed before commencement of production, with one carve-out: payments scheduled after commencement of production as per contract are treated as deemed investment — such as payments on commissioning, on establishment of Performance Guarantee parameters, on issue of the PG certificate, and on issue of the Final Acceptance Certificate.

Clawback

The application and claim process relies, in the Ministry's own words, on certificates from statutory auditors and chartered engineers. The cost of every such certificate is borne by the applicant, as is the cost of any Chartered Engineer, Chartered Accountant, Cost Accountant, Company Secretary, lawyer or other professional, and the cost of inspections and site visits. Where such costs are incurred by the PMA, they are reimbursed by the applicant to the PMA along with applicable taxes.

The Claim Certificate Matrix (Annexure V)

Both the statutory auditor and chartered engineer certificates carry a UDIN, membership number and FRN, with signature and seal required on every page. Claims are addressed to the Nodal Officer, Ministry of Steel, with a copy to the Nodal Officer of the Project Management Agency — MECON Ltd, Ranchi.

What the Statutory Auditor Is Actually Certifying

• •That investment has been made in accordance with the scheme guidelines, and after the date of notification of PLI 1.2.
• •That the committed investment has been achieved before commencement of production, and that limiting investment has been achieved before claiming incentive.
• •That investment has been capitalised in the books of account in line with the relevant accounting standards issued by the ICAI.
• •That all related party transactions have been at arm's length price as defined under the Income Tax Act and under AS-18 / Ind AS 24.
• •Purchase-order-wise breakup of permissible investment, distinguishing payments made before and after the notification date, capitalised values for each, and deemed investment.
• •For production: invoice-wise quantity and value net of taxes, less credit notes and discounts, certified as produced from the unit installed under the scheme against the applied sub-category.

Permissible Investment — the Annexure III Rules

Change of Control and Successor-in-Interest

• •An applicant must intimate any change in the shareholding pattern during the scheme tenure, after updating with the Registrar of Companies.
• •Where a change in shareholding leads to a successor-in-interest, the PMA intimates the Competent Authority.
• •All investment undertaken by the original approved applicant continues to be considered for eligibility, subject to approval and any conditions the Competent Authority stipulates. Critically, the baseline applicable to the successor-in-interest is the same as that determined for the original applicant — a change of hands does not reset the subtraction base.
• •The successor must express willingness to comply with all terms of the original MoU, and after approval must sign a fresh MoU with the Ministry of Steel on the same terms.

Ongoing Reporting

Selected companies file a Quarterly Review Report (Annexure VI) through the online portal, covering, at the project implementation stage, item-wise committed investment against investment made in the quarter and cumulatively with percentage progress, physical progress of main technological, auxiliary and civil facilities, and a brief delay analysis against the schedule plan; and at the production stage, grade-wise sales quantity and value for the quarter and cumulatively. The guidelines require that the total committed investment shown in the QRR match the committed investment furnished in the application form.