The government’s continued focus on infrastructure in the Union Budget 2023-24 will ensure sustained long-term growth in steel demand, according to experts.
On Wednesday, Finance Minister Nirmala Sitharaman increased capex for infrastructure development in the country to Rs 10 lakh crore in the Budget. She also announced a capital outlay of Rs 2 lakh crore for the modernisation and expansion of the Indian Railways.
”Infrastructure, building and construction sectors together account for around 60 per cent of the end-use steel consumption share in the domestic market. Continued focus on infra projects will ensure sustained long-term growth in steel demand,” CareEdge Ratings said.
The rating agency further said that the increased outlay for railways and PM Awaas Yojana is positive for alloy as well as non-alloy steel producers.
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SteelMint said the exemption on ferrous scrap from basic customs duty (BCD) and on raw materials for manufacturing cold rolled grain oriented (CRGO) steel will facilitate the availability of raw materials to the steel sector besides saving their cost of production.
The expansion in the railway network in the country will translate into increased usage of steel and help enhance higher domestic crude and finished steel production, the research firm said.
Jayanta Roy, Senior Vice President & Group Head said, the Budget has made a strong push for infrastructure-led growth in the country, with the capital outlay for infrastructure projects being raised by 33 per cent in FY 2023-24.
Cumulative allocations to flagship schemes like the Pradhan Mantri Awas Yojana and the Jal Jeevan Mission have been increased by 65.8 per cent and 16.7 per cent year-on-year, respectively, which is a positive for the long steel and pipe manufacturers.
Acuite Ratings & Research Limited said a large investment of Rs 75,000 crore proposed for one hundred critical transport infrastructure projects, primarily for ports, coal, steel, fertiliser and food grains sectors will increase the demand for these materials.
Nikhil Bothra, Director, EPACK PREFAB, said the budget reflects the government’s determination to promote long-term development. Critical infrastructure like railways and airports to improve regional connectivity will lead to long-term economic growth by generating employment opportunities and also give a fillip to ancillary sectors like steel and cement.