Push on infra, green power to boost domestic demand for steel: Jindal Steel and Power

Bimlendra Jha, MD, Jindal Steel and Power

India’s increased focus on infrastructure spending and green energy is likely to push domestic demand for steel and aluminium and impact growth of the sector positively, Jindal Steel and Power said.

“The direct impact of infrastructure and growth is felt on steel, power and cement sectors. These are sectors which are going to be positively impacted. Because of the green power focus, it is creating more demand for aluminium, steel, and solar cells,” Jindal Steel and Power managing director Bimlendra Jha told Moneycontrol.

Due to its lightweight strength and resistance to corrosion, aluminium is widely used to build renewable energy platforms such as solar panels and wind turbines. Building solar farms and  green energy infrastructure requires carbon-intensive materials such as steel and concrete.

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Driven by a strong momentum in infrastructure spending and sustained growth in urban consumption, steel demand in India will expand by 8-9 million tonnes in each of the next two financial years, resulting in growth of 7.5 percent in FY24 and 6.3 percent in FY25, the India Steel Association said in a statement earlier. Demand will touch 128.85 million tonnes in FY24 from 119.86 million tonnes in FY23, it said on May 26.

Increased capex

Public expenditure on building infrastructure has been ramped up in the past three to five years. The government’s budgeted capital expenditure will rise 33 percent to Rs 10 lakh crore in FY24 from levels in the previous financial year.

“I think 75 percent of India is yet to be built. Infrastructure and construction are going to be the mainstay of India’s growth story. The auto sector, yellow goods, white goods will get a boost as they are interlinked,” Jha said.

India started to increase capital expenditure after the onset of the pandemic. The Central government increased capex by 21 percent to Rs 4.1 lakh crore in FY21 from Rs 3.4 lakh crore in the previous year. In FY22, capex was increased by 33 percent to Rs 5.5 lakh crore. In FY23, it was ramped up by 31 percent to Rs 7.28 lakh crore.

“The infrastructure built during Covid-19 times is paying rich dividends in terms of growth of the economy. The way India managed its crisis during Covid-19 was fundamentally different from the way the rest of the world did. By merely giving people more money sitting at home is the primary reason why there has been so much money in the system that the western world is facing an inflationary economy. While in India, the same time was utilised for building infrastructure,” he said.

Inflation in European countries using the euro currency shot up to 8.9 percent in July.

“India is working to a different drumbeat compared to the rest of the world,” Jha added.