About the event
India is on the crossroads to establish itself as a major investment destination to become a manufacturing hub for the world. To further strengthen its position, on 11 November 2020, the Union Cabinet has announced that the Production Linked Incentive scheme will be extended to Specialized Steel manufacturing industry. The overall size of the schemes is pegged at INR 6,322 crore. The implementation body for the scheme is the Ministry of Steel.
Further, the steel business is prone to high fixed costs, and stable raw material prices amid falling demand (as observed in FY2019) can lead to reduced budgets for capacity expansion and financial loss. The slowdown of the global economy that started in the second half of 2018, as well as India’s own slowdown in FY2019, is threatening steel demand and harming the country’s steel exports. China has faced a serious deceleration, reinforced by the trade war with the US. Global trade wars in the steel sector undermine free trade and result in lost opportunities for companies, including Indian steel players.
The lacklustre demand for finished steel is a result of the slowdown in India’s economic growth, which has resulted in flagging demand from key steel-consuming industries, such as vehicle manufacturing and construction. There are also palpable raw material supply risks, with problems in iron-ore availability and threats of cheap steel imports from the global markets. The risk of cheap imports is a result not only of increased import possibilities from free trade agreement countries such as Japan and South Korea, but also of the negative domino impact of slowing global growth and ongoing trade frictions.
Thus, the PLI scheme for these sectors will act as a much-needed catalyst to make the sector cost competitive, in turn making themselves as Global Champions for both Domestic and Global markets and build on the Government’s initiative on “Atmanirbhar Bharat”.
ASSOCHAM is a proud partner of Government of India's push for nation building through the 'Make in India' initiative. As India makes this quantum jump, we seek your expertise and experience to evaluate and formulate the benefits/beneficiaries of the above-mentioned schemes. In addition, we propose to conduct sectoral stakeholder consultations between the Government and the Industry over the period of next 2 months (Jan-Feb’2020) and submit our recommendations to the respective esteemed implementation bodies as mentioned above.
To learn from esteemed speakers on below objectives
- The scheme should attract investments from the anchor units/mega projects (Manufacturing and assembly plants) to establish their base in India. Further, to add domestic value addition, the scheme should be extended to ancillary companies. We may add a direct linkage between the Ancillary sales to the anchor unit’s procurement. This will ensure that the entire eco-system is located within the country.
- Define the eligibility criteria for the scheme based on turnover, exports, local sourcing, R&D expenditure in India, market access in multiple countries and global investment in fixed assets
- The incentives given to units should be based on investments made on fixed capital investments (including land) to boost the production capacities or direct employment generated and subsequent increase in sales turnover (including exports).
- Define the percentage of the sales turnover for both the Anchor as well as ancillary units could be given as cashback to the units.
- Define the percentage of the sales turnover, should be given as incentives to overcome the logistical challenges faced on the distance travelled for the sales.
- Define the percentage of the sales turnover that should be given as R&D incentives
- It is desirable that the schemes should be WTO compliant and avoid later disputes.
- In addition, define the quantum of capital subsidy to the MSME units to improve their production capabilities.
For more details contact:
ASSOCHAM NATIONAL COUNCIL ON MANUFACTURING Mohd. Nahid Alam Deputy Director & Head Naonal Council on Manufacturing.