India’s metals sector faces a unique mix of visibility and risk as Budget 2026 draws near.
Growth Drivers and Infrastructure Demand
The energy transition and government-led infrastructure expenditures continue to boost the demand forecast. However, growing expenses, reliance on imports, and unpredictability in policy continue to hinder competitiveness, raising expectations for this year’s budget.
According to the Economic Survey, capital expenditures of Rs 11 lakh crore, or 3.2 percent of GDP, would support the 9–10 percent rise in steel demand. Together, roads, railroads (including 5,364 km of high-speed lines), and urban dwellings use about 69% of steel. This course is consistent with India’s goal of increasing steel production to 300 million tons by 2030.
Rising Metal Demand
Demand for steel, aluminum, and copper is rising along with the infrastructure for electric vehicles, the 500 GW renewable energy objectives, and the quick development of solar parks. Industry analysts predict a steady increase in metal intensity throughout electricity and transportation infrastructure, given that India is currently one of the top three worldwide solar markets.
Cost pressures are still quite strong despite this demand momentum. India still imports all essential minerals, including cobalt and lithium, which exposes manufacturers to fluctuations in the world market. Reliance on high-grade imports, sometimes at premiums of Rs 5,000 to Rs 7,000 per ton, is further compelled by low beneficiation rates, which are around 20% for iron ore compared to worldwide requirements of over 80%.
Budget 2026: Duty Rationalization and Cost Relief
“Budget 2026 might solve some of these difficulties via duty rationalization,” says Lt Col Rochak Bakshi (Retd), CFP. Reducing reliance and easing cost constraints might be achieved by rationalizing import taxes on vital minerals like cobalt and lithium to zero.
Furthermore, in the absence of change, mining royalties, which range from 15 to 18 percent, result in double taxation and effective cost hikes of around 25 percent. In order to increase domestic supply security, the sector is also looking for a change in mining regulations that would permit more private involvement in the production of copper and silver.
🏭 Metals Sector Investment & Demand Highlights
- Capital Expenditure: Rs 11 lakh crore
- Steel Demand Support: 9–10% rise
- Infrastructure Usage: Roads, railroads, urban dwellings (~69% steel)
- Production Goal: 300 million tons by 2030
- Focus: Renewable energy, EV infrastructure & solar parks
Protectionism and Policy Challenges
Concerns about dumping have sparked a renewed discussion about safeguard responsibilities, especially in the steel industry. Excessive protectionism, according to the Economic Survey, may raise manufacturing costs and reduce downstream competitiveness.
Bakshi cautions that as demand increases, postponed changes might exacerbate the scarcity of basic materials. He claims that at a time when global supply risks are already high, “over-protectionism risks boosting prices and weakening competitiveness.”
Gold Market Policy and Investment
Policy predictability appears as a larger topic across commodities, including gold. The founder and chairman of Vighnaharta Gold Ltd., Mahendra Luniya, notes that “frequent adjustments in import taxes tend to skew local pricing without diminishing demand.” Predictability and closer alignment of local pricing with international standards would result from a stable and sensible tariff regime.
“Encouraging formal, traceable gold assets, such as regulated and digital gold, may transfer family savings into the formal sector while supporting demand sentiment,” Luniya continues.
⚠️ Mining & Metal Cost Challenges
- Concern: Safeguard tariffs may raise costs
- Focus: Align domestic metal prices with global markets
- Private Mining: Calls for copper & silver participation
- Policy Needs: Stable tariff & import duty rationalization
- Execution: Reduce expenses & boost competitiveness
Execution Over Announcements
Budget 2026 is more about execution than announcements for the metals sector as a whole. The industry is searching for cost reduction, mining reforms, and steady policy signals to enable Indian metal producers to expand competitively in a world that is becoming more unpredictable.
Frequently Asked Questions
1. What effect would Budget 2026 have on the demand for steel?
Infrastructure investment on roads, railroads, and urban housing—which together account for about 70% of consumption—is anticipated to sustain the demand for steel in Budget 2026.
2. Will Budget 2026 lessen the pressure on metal prices?
Yes, by rationalizing duties on essential imports like cobalt and lithium, reforming mining royalties, decreasing reliance, and cutting manufacturing costs.
3. What changes to mining regulations are anticipated?
In order to improve domestic supply security, the industry looks for regulations that permit more private involvement in the mining of copper, silver, and other important metals.
4. How will protectionist policies impact the ability to compete?
Excessive safeguard tariffs, particularly for manufacturers of steel, aluminum, and copper, may raise industrial costs and reduce downstream competitiveness.
5. What effect would Budget 2026 have on gold investments?
In addition to encouraging official investment channels, stable import taxes and the development of digital and regulated gold might bring local prices into line with international benchmarks.
Conclusion
By cutting expenses, promoting mining reforms, and offering stable policies, Budget 2026 might assist India’s metals sector maintain its competitiveness. Since there is already a lot of demand, growth and global alignment will depend on execution.
Disclaimer:
This content is for informational purposes only and does not constitute financial or investment advice. Readers should consult a professional before making decisions.
