The US has questioned India’s Production Linked Incentive (PLI) scheme for speciality steel at the WTO. 

PLI Scheme 1.1 for Speciality Steel

• The original PLI Scheme for Speciality Steel was launched in 2021 to boost domestic manufacturing, reduce imports, and strengthen India’s steel sector.
• The government revised and relaunched the scheme in 2025 as PLI 1.1.
• Launched by: Union Ministry of Steel and Heavy Industries.
• Incentive Period: FY 2025-26 to FY 2029-30.
• Five Product Categories: Coated/Plated Steel, High Strength/Wear Resistant Steel, Specialty Rails, Alloy Steel Products & Steel Wires, and Electrical Steel.

Key Changes in PLI 1.1

• Relaxed Eligibility Criteria: Lower minimum investment thresholds to allow more firms (including MSMEs) to participate.
• Extended Timelines: Revised timelines for implementation and achieving production targets, allowing firms more time to set up and scale operations.
• Focus on High-End Segments: Stronger incentives for advanced steel categories like electrical steel, tool steel, and alloy steel with defense, automotive, and clean energy applications.
• Simplified Incentive Disbursement: Faster and more transparent disbursal mechanisms linked to actual sales and performance.
• Technology Upgradation Support: Encouragement for companies investing in green technologies, automation, and R&D.

Objectives of PLI 1.1

• Reduce dependency on imports of specialty steel.
• Promote high-value steel manufacturing.
• Strengthen India’s position as a global steel powerhouse.

The key concerns raised by the USA

• Subsidising Amid Global Overcapacity: India is subsidising increased production of steel when there is already a global overcapacity in the metal. 
  • This implies concerns about market distortion and potential oversupply.
• Appropriateness of Subsidies: Subsidies under the PLI scheme may not be justified when the steel sector is already facing excessive supply.

India’s response to the US’s concerns

• Addressing Import Dependence: PLI scheme is aimed at reducing reliance on imports of high-grade and speciality steel.
  • India remains a net importer of steel despite being the second-largest steel producer globally.
• Promoting Self-Sufficiency (Atmanirbhar Bharat): PLI scheme is a strategic move toward self-reliance in critical steel grades.
  • Steel is important for national security and economic resilience, especially during global disruptions.
• Modest Support Compared to Global Practices: India’s subsidy of ₹6,322 crore (under PLI 1.0) is modest when compared to countries like China.
  • China reportedly provides around $50 billion in steel subsidies.
• Encouraging Technological Maturity: PLI is intended to help Indian steelmakers move up the value chain by promoting production of value-added and high-end steel.
• WTO Compliance: PLI scheme complies with WTO rules since it does not:
  • It does not include any export obligations, 
  • Does not link subsidies to export performance, both of which are prohibited under WTO norms.
  • Instead, the scheme incentivises domestic investment and sales growth.

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