The Union Budget 2025–26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, has set a decisive tone for India’s economic trajectory. Central to this year’s budget is a substantial 10 per cent uplift in capital expenditure, taking the capex tally to ₹11.21 lakh crore (~3.1 per cent of GDP) – a significant expansion from last year’s ₹10.18 lakh crore. This robust investment in infrastructure and manufacturing is set to be a major catalyst for steel demand.
Industry commentators highlight that the increased spending-targeted at roads, railways, ports, logistics corridors, and urban redevelopment-will directly translate into heightened activity in steel-intensive sectors. Specifically, steel consumption in infrastructure projects, including bridges, smart cities, and industrial builds, is expected to rise significantly.
Moreover, the budget introduces several policy levers to amplify this impact. These include tax incentives for infrastructure-linked investments, a three-year PPP pipeline, interest-free capex loans worth ₹1.5 lakh crore for states, and an ambitious urban infrastructure fund of ₹1 lakh crore. MSMEs are also empowered through enhanced credit support, ensuring broader participation in steel-related construction efforts.
Crucially, this capex expansion arrives alongside measures to promote sustainability and green construction. Incentives for shipbuilding and increased utilization of scrap materials align with national goals of reducing carbon emissions and shifting toward green steel.
While some experts caution that the capex growth may not be as strong a buffer as in previous years, the overall consensus remains optimistic. The steel sector stands to gain from policy momentum and the government’s infrastructure priorities.
