India’s new coalition government formed in June has announced its budget for the fiscal year ending March 2025.

The budget maintains the capital expenditure target at INR 11.1 lakh crore ($132.7 billion), as set in the interim budget in February. This capex target represents over 3% of GDP, notes Kallanish.

Additionally, the government will provide INR 1.5 lakh crore ($18 billion) in interest-free loans to states to support infrastructure projects.

Over the past three years, the Indian government has significantly increased infrastructure spending to boost economic growth.

However, with no change in infrastructure spending confirmed against the interim budget, any immediate positive impact on Indian steel and raw materials markets seems unlikely, market participants say.

"As there is no major change in infra spending from the interim budget announced in February, steel market sentiment, which has been under pressure for the past two months, is expected to remain sluggish in the near term due to seasonally slack demand amid heavy monsoons across various states," says an industry source based in Delhi.

In a key development for the steel sector, the government has proposed to continue with zero customs duty on ferrous scrap imports and remove the customs duty of 2.5% on ferronickel, a crucial alloying agent in stainless steel production.

"Indian steel mills have long urged the government to reduce raw material costs, and this duty removal is definitely positive news for us. Raw materials including ferronickel make up 70% of stainless steel production costs, so this will bring some relief to the mills," remarks an industry veteran. "However, to curb cheaper Chinese imports, we also need trade measures."

India imports around 1.14-1.15 million tonnes/year of ferronickel, primarily from Indonesia, followed by Korea, Singapore, Switzerland, and Albania. In 2022, India was the fourth-largest importer of ferronickel globally.