Home Stories Economy Budget 2021-22: PAVING WAY FOR SELF RELIANCE



Finance Minister Nirmala Sitharaman, while presenting the first digital Union Budget, 2021-2022, said its preparation was undertaken in circumstances like never before. She said the government knew of calamities that have affected a country or a region within a country, but what India has endured with Covid-19 through 2020 is sui generis (of its own kind).
Union Budget 2021-2022, with its thrust on domestic manufacturing and ease of doing business, presented a balanced approach to foreign direct investment (FDI) that further strengthens India’s attractiveness as an investment destination. Alongside multiple commendable growth plans for the infrastructure sector, the Budget also identified warehousing and allied services for the asset monetisation programme of core infrastructure projects.
The focus on infrastructure will accelerate development of urban metro-rail networks, highways, logistics & warehousing, and airports. These initiatives are being planned across tier-2 cities and will improve connectivity across growth corridors.

Key highlights

Here is the list of the Union Budget’s key highlights compiled by Steel360 from a steel maker’s perspective:


Expansion of the National Infrastructure Pipeline (NIP) to 7,400 projects.

By March 2022, under the Bharatmala Pariyojana project, the government would award another 8,500 km of national highway corridors and complete an additional 11,000 km.

An outlay of INR 118,101 lakh crore for the Ministry of Road Transport and Highways, of which a record INR 108,230 crore is for capital expenditure.


Strategic disinvestment to be completed in BPCL, Air India, Shipping Corporation of India, Container Corporation of India, Neelachal Ispat Nigam Limited, among others, by 2021-22.


Indian Railways has prepared a National Rail Plan for India–2030, which aims to create a ‘future ready’ Railway system by this deadline.

Bringing down the logistic costs for industry is at the core of the strategy to enable ‘Make in India’. It is expected that the Western Dedicated Freight Corridor (DFC) and Eastern DFC will be commissioned by June 2022. The following additional initiatives are proposed:

The Sonnagar-Gomoh Section (263.7 km) of Eastern DFC will be taken up in PPP mode in 2021-22. The Gomoh-Dankuni section of 274.3 km will also be taken up in short succession.

Future dedicated freight corridor projects, namely East Coast Corridor from Kharagpur to Vijayawada, East-West Corridor from Bhusaval to Kharagpur to Dankuni and North-South Corridor from Itarsi to Vijayawada to be undertaken. Detailed Project Reports will be undertaken in the first phase.

Broad gauge route kilometres (rkm) electrification is expected to reach 46,000 rkm, ie, 72%, by end of 2021, from 41,548 rkm on October 1, 2020. Around 100% electrification of broad-gauge routes will be completed by December, 2023.

INR 1.10 lakh crore outlay for Railways, of which INR 1.07 lakh crore is for capital expenditure.

Ports, Ships, Waterways

Recycling of Ships Act, 2019 enacted and recycling capacity to be doubled by 2024.

A scheme to promote flagging of merchant ships in India will be launched by providing subsidy support to Indian shipping companies in global tenders floated by ministries and CPSEs. An amount of INR 1,624 crore will be provided over five years.

PPP mode to be utilised for managing operational services of major ports.

India has enacted the Recycling of Ships Act, 2019 and acceded to the Hong Kong International Convention. Around 90 ship recycling yards at Alang in Gujarat have already achieved HKC-compliant certificates. Efforts will be made to bring more ships to India from Europe and Japan. Recycling capacity of around 4.5 million light displacement tonne (LDT) will be doubled by 2024.

Urban Infrastructure

The government is working towards raising the share of public transport in urban areas through expansion of metro rail network and augmentation of city bus services.

A total of 702 km of conventional metro is operational and another 1,016 km of metro and RRTS are under construction in 27 cities. Two new technologies, MetroLite and MetroNeo, will be deployed to provide metro rail systems at much lesser cost with same experience, convenience and safety in Tier-2 cities and peripheral areas of Tier-1 cities.

Central counterpart funding will be provided to:

Kochi Metro Railway phase-II of 11.5 km at a cost of INR 1,957.05 crore.

Chennai Metro Railway phase-II of 118.9 km at a cost of INR 63,246 crore.

Bengaluru Metro Railway Project phase 2A and 2B of 58.19 km at a cost of INR 14,788 crore.

Nagpur Metro Rail Project phase-II and Nashik Metro at a cost of INR 5,976 crore and INR 2,092 crore respectively.

Scrapping Policy

Voluntary Vehicle Scrappage Policy announced for private and commercial vehicles.

Private vehicles older than 20 years and commercial vehicles older than 15 years to undergo fitness tests.

Vehicle fitness tests to be conducted at automated fitness centres.

Affordable Housing

Affordable housing projects can also avail a tax holiday till March 31, 2022, which is a supply-side stimulus that will aid real estate developers. Combined with low home loan interest rates, these initiatives are expected to provide a strong stimulus to affordable housing markets.

Duty changes

Customs duty on steel imports (including flat products of iron or non-alloy steel and alloy steel) reduced to 7.5%.

Import duty on ferrous scrap imports slashed to 0% from 2.5%.

Many industry experts say that the steel industry will benefit from the infrastructure push that the Budget gives, while some other criticised the Budget for reopening the floodgates for Chinese firms to dump their products in the Indian market.


Indian Steel Association: ISA is particularly happy at the proposals related to increased construction of roads and highways as well as the proposed introduction of a Bill to set up a Development Finance Institution for financing infrastructure and development.
Stepped-up budgetary allocations for railways, metro services, development of more airports, the encouragement to the Jal Jeevan Mission Urban and the rural infrastructure development sector are also very positive developments.
We warmly welcome the announcement for removal of anomalies such as the inverted duty structure in GST. Another very positive step has been the announcement of the long-awaited vehicle scrappage policy.
All in all, the Budget bodes well for the steel industry to continue its strong revival. With the focused concentration on infrastructure development, we see the possibility of enhanced job creation which will provide a major boost to the economy.

K.K. Pahuja, President,
Indian Stainless Steel
Development Association

The temporary suspension of the countervailing duties on stainless steel flat product imports has been a big unintentional gift to Chinese companies that will severely hit the domestic stainless-steel industry, which has been in financial stress for more than a decade.
For Chinese companies in Indonesia, this translates into heavy flooding of Indian markets with duty-free imports under the Asean FTA. Imports from Indonesia skyrocketed from just 8,601 tonnes in FY2017-18 to 76,102 tonnes in FY2018-19 and 280,575 tonnes in FY2019-20. This will not only hamper Indian production but will turn many MSME manufacturers into traders.
The government’s geopolitical stand on banning Chinese apps on one hand starkly contrasts the easing of bulk trade on the other hand to favour Chinese producers, especially after unfair trade practices have already been proven. Moreover, this stance on the suspension of duties, albeit temporary, will remain at loggerheads with the Atmanirbhar Bharat mission and the USD 5-trillion economy dream. This has more than offset the positives of the Union Budget in terms of duty exemption on scrap and higher infrastructure spending.


Sumit Deb, CMD,
NMDC Limited
This Union Budget has given thrust on infrastructure, along with manufacturing. This will drive the demand for steel which in turn will drive the demand for iron ore. NMDC, with its seven operational iron ore mines, is committed to meeting the increased demand for iron ore in the country.


T.V. Narendran,
CEO & MD, Tata Steel:
Reduction in customs duty on steel products will have no significant impact on the industry as most of the steel imported into the country today comes from countries with whom India has an FTA and hence they enjoy zero import duty. However, the increased capex in the infrastructure sector, including healthcare infrastructure, will have a multiplier effect as it will create demand across product categories, including steel.


Soma Mondal,
Chairman, SAIL
The Budget for 2021-22 has put emphasis on accelerating the growth momentum of the country by targeting infrastructural growth, including roads, rails, urban, power, ports, shipping etc. The National Infrastructure Pipeline (NIP) incorporates 500 more new projects. The creation of the Development Financial Institution will help address the funds requirements of different agencies. The announcement of Production Linked Incentive Scheme, Vehicle Scrapping Policy, coverage of one crore more families under Ujjwala Yojana etc will boost domestic production. All these measures and thrust on infra development will have a major positive impact on the demand for steel in the long run.


Seshagiri Rao, Joint MD, JSW Steel & Group CFO
The Union Budget for FY21-22 is not only historic but also path-breaking with counter-cyclical fiscal policy calibration with an emphasis on building modern infrastructure. The twin challenges of rekindling economic growth and well-defined fiscal consolidation roadmap are addressed elegantly in this Budget. A slew of measures announced in the health and education sectors are the foundation for sustainable development of the Indian economy.
The financial sector reforms namely creating an institutional structure for financing infrastructure, recapitalisation of banks, increased FDI threshold in the insurance sector to 74%, framework for addressing stressed assets in the banking sector, single securities market code are the hallmarks for a healthy financial sector to accelerate the financing and augmenting credit flow to the economy.
The steel sector, in particular, will benefit immensely from the surge in demand due to higher outlays on infrastructure and public capital spending.


P.K. Rath,
In view of the new Resurgent India in the post-Covid era, the digital Budget proposed by Finance Minister based on six pillars of economic growth is very much in alignment with making India self-reliant ‘Atmanirbhar Bharat. It focuses on sound structural reforms with a view to improving sustainable macro-economics of the country. The enhanced capital expenditure layout of INR 5.54 lakh crore, an increase of 34.5% over the current financial year, with enhanced outlay for infrastructure projects, highways, housing, metro railways etc. augur well for the long category of steel.



V.R. Sharma,
Overall, this is a progressive Budget, which will help boost growth, job creation with a focus on nation-building. The government has given adequate support for creating an Atmanirbhar Bharat. The increased capital expenditure will help the steel industry. The vehicle scrapping policy will not only help reduce pollution and accidents but will also help in decentralisation of the steel industry. The announcement of the National Hydrogen Energy Mission is a great step toward greener manufacturing and sustainable development. INR 25,000 crore of spending on the roads sector in West Bengal is a great initiative.


Dilip Oommen,
CEO, AM/NS India
Heavy spending on infrastructure and increased spending for capital expenditure creation are welcome moves. Asset creation in roads, rails, pipelines, textile parks, power sector, etc. is a forward-looking initiative. DFI has been conceptualised and lending portfolio of INR 5 lakh crore in three years is a step in the right direction.
If there was no reduction in customs duty on finished and semi-finished steel, it would have helped the domestic steel sector instead of some non-FTA neighbouring countries. In order to provide relief to MSMEs, which have been hit hard by the high cost of raw materials, import duties on a number of steel items have been slashed, while on certain steel products the anti-dumping duty (ADD) and countervailing duty (CVD) have also been revoked.


Shubham Jain,
Senior VP & Group Head, Corporate Ratings, ICRA
Capital outlay towards key infrastructure segments has been increased significantly. The Central government has also provided a capital support of INR 0.45 lakh crore for the Infrastructure Pipeline, and allocated INR 20,000 crore for a new DFI with the target of lending over INR 5 lakh crore over three years. Allocation towards NIIF has also been increased to INR 5,000 crore, while another INR 1,000 crore has been allocated to NIIF’s Infrastructure Debt Financing Platform.
Higher budgetary allocation, asset monetisation, and raising capital through routes like DFI, NIIF, InvITs are positive for the sector and will support financing of the National Infrastructure Pipeline.


Sandeep Mathur,
Brand Leader,
CASE India
Budget 2021-22 has put a lot of focus on reviving the infrastructure sector. The government’s effort towards further enhancing the roads and highways projects to 7,400 new ones is a welcome step which will ensure a better year for the infrastructure sector as well as for the construction equipment industry. The introduction of the Development Finance Institution providing INR 20,000 crore to launch the National Asset Monetization Pipeline to fund new infra projects will strengthen the stability of the sector. Additionally, the multitude of announcements on the highway projects in Tamil Nadu, Kerala, West Bengal and Assam will further give a much-needed boost to the sector. The government’s vision of committing INR 1.97 trillion to the manufacturing sector over five years will help the industry immensely. We are confident that all these efforts will play an important role in reviving the sector and bringing back the economy to normalcy.