The Union Budget for 2024-25 has brought cheer to India’s steel industry with significant import duty reductions on key raw materials and substantial indirect benefits from increased infrastructure and affordable housing spending.
Finance Minister Nirmala Sitharaman announced in her budget speech the removal of the 2.5% basic customs duty (BCD) on ferronickel imports, a critical component for producing stainless steel and specialty alloys. This measure is expected to lower production costs and enhance the competitiveness of Indian steel manufacturers. Additionally, 25 critical minerals will now attract zero BCD, further easing the raw material supply chain for the industry. The exemption on ferrous scrap from BCD will continue for another two years, until 31 March 2026, supporting steelmakers who use ferrous scrap as a minor input material.
The government’s plan to financially support high-grade steel manufacturing in India is another significant step welcomed by the sector. This initiative aims to bolster the domestic production capabilities and reduce reliance on imports for high-grade steel, fostering self-sufficiency and innovation within the industry.
Indirect benefits for the steel industry are also substantial. The government’s commitment to providing an additional two crore affordable houses over the next five years, coupled with the continuation of its infrastructure-led growth policy, is set to drive domestic steel demand. Experts believe this will help steelmakers combat the challenges posed by weak global demand and overcapacity in China, the world’s largest steel producer, which has kept steel prices muted in recent months.
Overall, the Union Budget for 2024-25 is seen as a positive development for India’s steel industry, with policies aimed at reducing costs, supporting high-grade steel manufacturing, and stimulating domestic demand through infrastructure and housing projects.
