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Fair trade, focus on manufacturing, infra on steel firms' Budget wish list

Steel companies hope the govt will continue to focus on infra expansion while also giving the industry a level playing field to compete with imports

Industry, economy, jobs, iron and steel

The infrastructure segment is the largest steel user, and the Indian government's focus has fuelled steel consumption even as international markets have underperformed. (Photo: Bloomberg)

Ishita Ayan Dutt Kolkata

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India's leading steel companies hope the Modi 3.0 Budget will continue the massive capital expenditure currently underway, focusing on infrastructure development, manufacturing, and fair trade.

The infrastructure segment is the largest steel user, and the Indian government's focus has fuelled steel consumption even as international markets have underperformed.

According to provisional statistics, steel consumption grew 13.6 per cent in FY24, reaching 136 million tonnes (mt), according to a CRISIL report. The upward trend was supported by 'strong' finished steel production, which increased 12.7 per cent year-on-year, reaching 139 mt, the report said.

It is hardly a surprise that steelmakers are pinning hopes that the government remains steadfast on infrastructure spending.

T V Narendran, managing director and chief executive officer, Tata Steel, expects the government to continue investing in infrastructure and keep addressing the cost and ease of doing business.

Jayant Acharya, joint managing director and chief executive officer of JSW Steel, explained that infrastructure capital expenditure has a direct multiplier effect on the country's economic output. "We expect the government to continue with its focus on infrastructure spending."

As the supply side is being increased, measures to improve consumption would be a welcome step, he added.

A focus on manufacturing is another big ask from the sector.

Apart from doubling down on infrastructure spending, Ranjan Dhar, director and vice president of sales and marketing, ArcelorMittal Nippon Steel India (AM/NS India), said, "We need to do massive heavy lifting on the manufacturing side."

JSW Steel's Acharya called for the extension of the concessional income tax rate of 15 per cent to promote manufacturing in the country and smoother transmission benefits under the production-linked incentive scheme to boost 'Make in India'.

The Indian government has set a target of achieving a 300 mt steel capacity by FY31, and companies have aligned their expansion plans accordingly. But a surge in imports has been impacting prices.

AM/NS India's Dhar pointed out, "Indian steelmakers are putting in a huge amount of capital expenditure. If margins go down, then investors and bankers will squeeze investment, which will delay the capital expenditure. The industry must be protected from injury."

The basic customs duty on steel should be raised from 7.5 per cent to 12.5 per cent, he said.

The views are echoed by JSW Steel's Acharya. "India needs to implement appropriate trade measures in the wake of external volatility and diversion of material, including steel, into the country."

India turned a net importer of steel in FY24. The overall steel trade deficit was 1.1 mt in FY24, marking a shift in status from a net exporter since financial year 2017, the CRISIL report mentioned.

According to the Indian Steel Association, the apex body of steel producers, there should be a level playing field.

"The government should have stricter product-specific rules of origin for steel in the form of 'melt and pour' to arrest predatory steel imports from China rerouted through Vietnam under the India-Asean free trade agreement," said Alok Sahay, secretary general of the association.

Sahay also said that India has a natural advantage in iron ore and that double taxation on the raw material should be corrected to make it cheaper.

As companies step up capacity, they are also trying to keep the carbon footprint in check.

Sahay said the industry was awaiting policies to incentivise investments in decarbonisation and demand generation for low-carbon emission steel. "Use of low-carbon steel in government projects can become a starting point for demand generation."

Call of the steel
 Tata Steel MD & CEO T V Narendran calls for continued investments in infrastructure
 JSW Steel Joint MD & CEO Jayant Acharya says govt should extend concessional income tax rate of 15% to promote manufacturing 
 Ranjan Dhar, director & V-P (sales and marketing) of AM/NS India, believed massive heavy lifting is needed on manufacturing side


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First Published: Jul 09 2024 | 8:59 AM IST

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