Steel industry’s wish list from Union Budget 2023: Seeks FM’s attention on six areas

As the Indian steel industry waits for the finance minister to unveil the budget, here is their wish list regarding the Union Budget 2023


The Indian steel industry is often considered the barometer of economic progress, because of the critical role played by it in the infrastructural and overall industrial development of a country. Currently, the Indian steel industry is the second largest steel producer in the world, contributes approximately 2.5 per cent to the GDP and employs 2.5 million people, directly and indirectly. The output effect of steel on the Indian economy is approx. 1.4 times, with an employment multiplier of 6.8 times.

If we go by crude steel production numbers, it has expanded to 120 MT in FY2021-22, up by 15.9 per cent from FY2020-21. The capacity for domestic crude steel expanded from 137 MT pa in 2017 to 154 MTPA in FY2021- 22. Total finished steel has increased to 113.59 MT in FY2021-22, up by 18.1 per cent from FY2020-21.

The government aims to double the country’s annual crude steel making capacity to 300 MT from 150 MT at present. Moreover, in accordance with the targets that had been set via the National Steel Policy, large expansion plans have already been declared by major steel producers, who aim to reach 300 million tonnes of steel production by 2030. But to reach these goals, the Indian steel industry is asking for strong measures from the Union Budget 2023.

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Lalit Beriwala, Director at Shyam Steel Industries Ltd, while discussing in detail the wish list of this sector from the Union Budget 2023, tells us about the six major demands of the steel industry from the government.

“We expect the Hon’ble Finance Minister, Nirmala Sitharaman to focus on these areas while presenting the union budget this year,” he says.

1: Fuel Transition Policy 

The steel industry in India is more energy and emissions intensive than the other countries’ steel industries, due to several factors. Also, steel production in smaller facilities relies heavily on coal-based direct reduction to meet domestic demand, which carries a high carbon dioxide intensity.

To achieve the target of net-zero emissions by 2070, it’s imperative for businesses to facilitate a sectoral transition to green technologies. Hence, the industry is seeking a fuel transition policy together with a stable financial support scheme for the private sector industries for the phased energy transition process to realise this national commitment as this process entails a major capital investment.

2: Enhanced outlays in 2023-24

The sector is positive about the Union Budget 2023-24. The stakeholders are anticipating that some good measures will be taken on the sectoral allocations for capital investment by the government. Particularly, the stakeholders are expecting announcements in the infrastructure sector, which will directly boost the steel demand in the country. This will include the construction of new national highways and the expansion of the existing ones.

This will also include the building of new expressways, the building of more state highways, the upgradation of the existing rural road infrastructure and network, the building of new metro railways and airports, the upgradation and modernisation of the existing airports that connect the newly developed cities, the building of more logistic hubs and industrial corridors, an improvement in the connectivity of the rail and inland waterways, the boosting of the health and social sectors for accelerated economic growth and the encouragement of private investment in those sectors.

Besides that, incentivisation and encouragement to the private sector will bring prosperity to the economy. Beriwala feels that government initiatives to support the private sector will enhance the health of the overall Indian economy. For instance, investment in the agri-infrastructure sector is critical for strengthening the rural economy and for creating more employment opportunities in the sector for the overall economic growth of the country.


3: Policies for mining

While other minerals are available in sufficient amounts, India is dependent on imports for the coking coal raw material that is required for steel production. The country imported 57 MT of coking coal in FY22 to produce 120 MT of crude steel. According to government data, new reserves of coking coal are being identified. The country has around 34 billion tonnes of coking coal, of which about 18 billion tonnes have already been proven.

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However, the industry needs stringent policies for tech development for mining and washing it. Beriwala urges the government to provide specific policy interventions for faster mining sector reforms as a part of the ease of doing business. He is hoping that this move will ensure the seamless availability of raw materials for the steel industry, particularly for the MSME sector and address the issue of the monopoly over raw materials by a few big players in this sector. 

4: Measures for MSMEs

MSMEs are the lifeblood of the Indian economy. The target of a $5 trillion economy will not be met unless they are prioritised. Agreeing with this fact, Beriwala urges the government to focus on MSMEs once again. The union budget should include some provisions for a special economic package for the medium-sized industries to help them recover from the COVID-19 pandemic, which is threatening the sector again after a slow recovery from the previous phase.

Another recommendation is that of policy formulations for the upliftment of the MSME sector. There should be a separate scheme on the PLI-based model and its implementation for medium-sized industries in a separate category. This scheme should include businesses with a turnover of between Rs 200 crores to Rs 10,000 crores.

Other schemes and policies should be formulated and implemented to create more jobs. These policies should focus on long-term employment opportunities for the rural, urban and semi-urban youth. This will reduce the pressure of unemployment on the Indian economy and improve the youth’s skill level as well, which will increase their employability.

5: Special initiatives for connectivity

Connectivity is critical for the ease of doing business. Beriwala suggests that the government should come up with special initiatives for strengthening the port infrastructure in the North-Eastern region for easy connectivity within the states of that region.

He also talks about connecting Agartala and Tripura through the riverine Inland Water Transport System on a priority basis for boosting business in the North-East and for enhancing external trade as well.

He also hopes that measures will be taken for connecting the neighbouring countries of Bangladesh, Bhutan and Nepal for the accelerated development of both domestic and external trade through the faster, more cost-effective and hassle-free movement of the commodities of trade. Furthermore, facilities for the faster movement of raw materials and finished products should also be created.

6: Extension of low taxes

A cut down in the tax rate is on the wish list of all sectors and the steel industry is no exception. The industry is seeking an extension of the provision of the low tax rate of 15 per cent that was introduced by the government under Section 115BAB of the Income Tax Act for new manufacturing companies that will start commercial production from 2024, till the 31st of March 2025.

In 2022, the government took various measures to support the steel industry by removing the export duty on steel items and by extending the export benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme to iron and steel products for a specified period. Now, as the union budget is once again around the corner, the stakeholders of the steel industry are anticipating some more initiatives from the government, initiatives that will provide a big boost to the steel sector in 2023.

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