India plans $129.4 billion in capital expenditure in FY2025/2026 budget

India has set capital expenditure at Rs 11.21 lakh crore ($129.4 billion) in the national budget for the fiscal year 2025/2026 (ending in March 2026), which is 3.1% of India’s GDP for the period.

The Union Budget was presented in the Parliament on February 1 by the Minister of Finance Nirmala Sitharaman.

According to the Indian investment company Groww, among the key points of the budget is the expansion of national infrastructure, which includes new sectors such as electric mobility and green energy, and urban modernization.

In addition, the tax system was announced to be simplified. The budget contains various initiatives aimed at simplifying tax compliance for both individuals and businesses, including tax incentives for green investments.

Environmental initiatives include investments in clean energy. The government has allocated significant funds for renewable energy infrastructure, including wind, solar, and green hydrogen projects.

In recent years, the Indian government has significantly increased infrastructure spending to boost economic growth.

Minister of Steel and Heavy Industries H.D. Kumaraswamy, in turn, said that the budget would give a boost to the steel sector through progressive interventions, which include a push for infrastructure investment, export promotion, and direct incentives, The Hindu Businessline reports.

The official added that significant efforts will be made to strengthen India’s domestic supply chain. According to Kumaraswamy, in addition to the automotive and railways sectors, industries such as shipbuilding, defense, and heavy engineering will benefit.

The Minister continues to insist on value-added steel production in India. According to him, the country’s growing role in global supply chains will increase demand for exports of high quality, specialty and value-added steel.

“We hope the launch of BharatTradeNet (BTN) will simplify export documentation and streamline trade processes, making it easier for Indian steel manufacturers to compete in international markets,” he said.

The proposed BTN is a digital public infrastructure for international trade.

The budget did not propose any significant changes in the structure of import duty rates for various types of steel products – the basic duty remains at 7.5%. However, the government has revised the tariff rate for imports of stainless steel flat products (600 mm wide and more) from 22.5% to 15%, effective from February 2, 2025.

The Indian Steel Industry Association, prior to the announcement of the budget for the next financial year, called on the government to double the basic duty on steel imports to 15% from 7.5% amid an oversupply of steel products in the country, which has led to oversupply and lower domestic prices in recent months.