Budget 2023-24: A New Hope For The Steel Sector  

By Satish Kumar Agarwal 

Though there was not much that was highlighted for the steel sector in the Budget of 2023-24, yet, there are opportunities to be seen that would propel the demand for steel in the domestic market. It is all about focusing on some of the key announcements that has been made pertaining to infrastructure mainly housing, railways, ports, airports, etc. and figure out the scope for demand. 

Railways: There is already an ongoing project related to redevelopment of more than 50 existing railway stations and making them multimodal transit facilities. Over and above that, the announcement made in this budget which says a capital outlay of Rs 2.40 lakh crore for the Railways which is said to be the highest ever outlay and is about 9 times the outlay made in 2013- 14. This is of course a major opportunity of the recent times which will translate into robust domestic steel demand. This will provide scope for private sector CapEx opportunity and further job creation.  

What is missing in this budget is the provision for ‘Tax Incentive’ for industry players making CapEx/OpEx for expansion, capacity utilization and use of new age technology application like IoT, AI, ML, etc. This would have rather pushed private sector players to make further investment by raising capital.  

Logistics & Regional Connectivity: The announcement made related to creation of one hundred critical transport infrastructure projects that will ensure first and last mile connectivity for ports, coal, steel, fertilizer, and food grain sectors will also spur up the domestic steel demand. The finance minister has said that these projects will be taken up on a priority basis with an investment of Rs 75,000 crores including Rs 15,000 crores from private sources. This, in particular, will enhance logistical efficiency. Further the announcement with regard to review of fifty additional airports, heliports, water aerodromes and advance landing grounds for improving regional connectivity will also create opportunities for domestic steel demand. 

Sustainable Cities: The finance minister during her budget speech announced that states and cities will be encouraged to undertake urban planning reforms with the objective of transforming them into ‘sustainable cities of tomorrow’. Further, an Urban Infrastructure Development Fund (UIDF) will also be established through use of priority sector lending which will be managed by the National Housing Bank. This will be used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities. This with an allocation of Rs 10,000 crore per annum for this purpose will actually translate into more opportunities for urban infrastructure development and transit-oriented development, thus creating more demand for steel. 

PM Awas Yojana: The budget also highlighted an outlay for Pradhan Mantri Awas Yojana – Urban (PMAY-U) that has been enhanced by 66 per cent to over 79,000 crores. The mission addresses urban housing shortage among the economically weaker sector (EWS), lower-income group (LIG) and middle-income group (MIG). This will also create more opportunities for housing and hence additional demand for steel.  

Last but not the least, the extension of waiver of customs duty on ferrous scrap, raw materials used in the manufacturing of Cold Rolled Grain Oriented (CRGO) and nickel cathode is a welcome step for the steel industry. Overall, it can be concluded that this is a good budget for steel manufacturers. Removal of ‘export duty’ on finished steel and iron products after inclusion in the RoDTEP scheme was already announced prior to budget and inclusion of ‘speciality steel’ under PLI scheme was lauded by steel makers as it will further provide a boost to ‘Make in India’ while adding to the ‘Atmanirbhar Bharat’ narrative.   

(Disclaimer: The author is CMD, Kamdhenu Limited. Views expressed in this article are personal)