Introduction

India's government is making it easier for small businesses to join a program that boosts steel production. On November 4, 2025, Union Steel Minister H D Kumaraswamy launched the third round of the Production Linked Incentive (PLI) scheme for specialty steel. This round, called PLI 1.2, aims to attract big investments and help make India a world leader in high-quality steel. In this article, we'll explain what the scheme is, the new changes for MSMEs (Micro, Small, and Medium Enterprises), its details, benefits, and more.

PLI Scheme for Specialty Steel?

The PLI scheme is a government plan to encourage companies to make more products in India. For specialty steel, it started in July 2021 with a total budget of Rs 6,322 crore. Specialty steel is high-grade steel used in important areas like cars, planes, defence, energy, and buildings. It's stronger, more resistant to rust, or has special features compared to regular steel.

The scheme gives money (incentives) to companies based on how much extra they produce and sell. This helps them grow and create jobs. The goal is to add about 26 million tonnes of new specialty steel production in India over the next few years.

Details of the Third Round 

The third round of the Production Linked Incentive (PLI) Scheme for Specialty Steel is designed to push India further up the value chain in the global steel industry. Unlike earlier rounds that focused mainly on basic or intermediate steel products, this phase targets 22 categories of high-end, advanced steel materials that are essential for next-generation industries.

These include:

1. Super Alloys – used in jet engines, space technology, and turbines, as they can withstand extremely high temperatures and stress.
2. CRGO (Cold Rolled Grain Oriented) Steel – a special magnetic steel used in transformers, electric motors, and power equipment to improve efficiency and reduce energy loss.
3. Alloy Forgings – vital for aerospace, defence, and heavy engineering, offering superior strength and durability.
4. Stainless Steel Grades – resistant to corrosion and widely used in construction, medical equipment, food processing, and kitchenware.
5. Titanium Alloys – known for being light yet incredibly strong, these are crucial in aerospace, automotive, and defence applications.
6. Coated Steels – include galvanized, tin-plated, and color-coated sheets, essential for automobiles, appliances, and packaging.

Overall, this third round is aimed at making India self-reliant in producing high-performance steels, boosting exports, strengthening defence and industrial manufacturing, and aligning with the “Make in India” vision for advanced materials.

Key features

1. Incentives: Companies get 4% to 15% extra money on their increased sales and value addition.
2. Time Period: Benefits last for five years, starting from the financial year 2025-26 (FY26). Payments start in FY27.
3. Base Year: Prices are based on 2024-25 to match current market rates.
4. Expected Investments: The government hopes to get Rs 44,000 crore in new investments to increase production.

How It eases entry for MSMEs?

In earlier rounds, it was harder for small companies to join because of high investment and capacity rules. Now, in PLI 1.2, the government has relaxed these thresholds. This makes it easier for MSMEs that have grown or improved their factories to participate. Both new and existing players, including small ones, can apply.

For MSMEs, there might be special support like higher incentives in the early years, simpler rules, and help with technology. This opens doors for them to make advanced steel without big barriers.

Key Benefits 

1. Reduces import dependency by cutting down India’s need to buy specialty steel from other countries.
2. Generates employment, as earlier rounds of the scheme have already created over 13,000 jobs, and future expansion will add many more.
3. Boosts the economy by increasing the value addition within the steel sector and enhancing GDP contribution.
4. Promotes India as a global leader in high-end steel used in defence, automobiles, infrastructure, and energy sectors.
5. Lowers production costs for industries that use specialty steel, making Indian products more competitive.
6. Encourages exports by developing globally recognized steel products, thereby improving India’s trade balance.
7. Strengthens MSMEs, potentially increasing their market share by 20–30% and integrating them into global supply chains.

How to Apply

Companies can apply through the government's portal. The exact investment for this round will be known in the coming months as applications come in. The government is encouraging more players, especially MSMEs, to join.