UNION BUDGET: Finance Minister Nirmala Sitharaman‘s continued focus on allocation towards capital expenditures should continue in the Union Budget 2024 as it may help the steel industry, TV Narendran, CEO & MD, Tata Steel said in a TV interview on Wednesday.”Well, as steel industry and as Tata Steel, we have always said we want the focus on infrastructure to continue because not only does it help steel demand, but it also helps reduce the cost of doing business outside the factory gates,” he told ETNow.

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“So, reducing the cost of doing business and improving the ease of doing business is what is most important,” he said.

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The Central government’s continued focus on capital expenditure has helped India’s GDP grow at an average of 8 per cent in the last three years. The Indian government turned to capex during the pandemic as a means to buoy the economy out of the recession. Even as it consolidated the headline fiscal deficit from 2020-21, it continued to lean heavily on capex to boost infrastructure.

This sort of expenditure tends to have a positive multiplier on the overall economy.

Budget 2024: Steel industry

FM Sitharaman in February 2024 announced the Interim Budget, wherein a focus was laid on increasing coal gasification and liquefaction capacity. Experts had said that such a move would reduce India’s reliance on imports of natural gas and other critical items, curb emissions and give a fillip to end-user sectors like steel.

The steel industry players have also routinely raised the issue of increasing steel imports from countries like China, which stands to impact the profitability of Indian players.

“I think between the steel companies, including Tata Steel, we are investing 30,000-40,000 crores a year in increasing capacity. So, when you have steel coming in which is priced very unfairly, I think the profitability of the industry is certainly impacted and if it goes on for too long, then obviously it will impact the ability to invest,” Narendran said.

Steel industry lobby has informed the concerned ministry about the same.

he surge in steel imports, predominantly from China and routed through Vietnam, raises apprehensions for domestic steel producers while India advocates for localisation.

The Centre also has a Production-linked Incentive Scheme (PLI) aimed at speciality steel.

As India emerges as the fastest-growing major economy, poised for significant infrastructure development and manufacturing expansion under ‘Aatmanirbhar Bharat,’ the steel industry urges increased government capital expenditure to boost infrastructure. Steelmakers also seek higher budget allocations for the PLI scheme to support the industry’s growth trajectory.

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