Budget 2024: Steel industry welcomes import tariff cuts, sustained infrastructure drive

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Budget 2024: Steel industry welcomes import tariff cuts, sustained infrastructure drive

Ferrous 24 Jul 2024 12:47 PM IST Live Mint

India's steel sector has a number of reasons to celebrate the Union Budget for 2024–2025, including lower import duties on several raw commodities and secondary advantages from higher spending on infrastructure and reasonably priced housing. Finance Minister Nirmala Sitharaman announced in her budget statement on Tuesday that the government would reduce the 2.5% basic customs charge (BCD) on ferronickel imports. Ferronickel is an essential raw ingredient for specialty alloys like stainless steel.

In a similar vein, zero BCD will be attracted to 25 essential minerals. Ferrous scrap, a minor input material used by steelmakers, will remain exempt from BCD for a further two years, expiring on March 31, 2026. “The budget has made a host of positive announcements for the country’s stainless-steel industry," said Anubhav Kathuria, director at Synergy Steels. "The removal of basic customs duty on ferronickel is a positive step, as is the decision to exempt 25 critical minerals from customs duty. The stainless-steel industry, in particular, will wait to see if molybdenum is in the list of 25.”

The steel industry also appreciated the government's decision to provide financial assistance for high-grade steel manufacturing in India, according to Kathuria. "On the other hand, we anticipate that this kind of assistance will also be provided to enhance the nation's superior stainless steel products," he added.

Analysts say the government's commitment to continuing its infrastructure-led economic growth agenda and building an additional two crore affordable homes over the next five years will also benefit the steel sector. “Budgetary government capex growth of 17.7% and healthy allocation for housing under PMAY (Pradhan Mantri Awas Yojna) will continue to provide an impetus to domestic steel and cement demand in fiscal 2025,” said Ankit Hakhu, director, CRISIL Ratings Ltd.

“This will support the credit profiles of domestic steel and cement players riding on the expected growth in infrastructure and housing spends, which together account for 60-65% of India’s steel demand and more than 80% of cement demand,” he said. The predicted boost in domestic steel demand will also assist steelmakers in battling the headwind of weak global demand, he said. China, the world's top steel manufacturer, has overcapacity, and poor global demand has kept steel prices low in recent months.

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Budget 2024: Steel industry welcomes import tariff cuts, sustained infrastructure drive

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