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Union Budget 2023 Drives Tubes & Pipes Industry Towards India’s Amrit Kaal

The status of any economy is a reflection of its economic initiatives. The Union budget FY 23-24 is an example of how an economy can harvest its benefits timely. The budget has appropriated monetary tools for seven-edged growth. Within this spectrum, the budget also has implicated the growth of the tubes and pipes industry as the country maneuvers its way through Amrit Kaal. Explore here the budget’s implications and how the major players plan to meet the increased demand for tubes and pipes.

union budget

It is the duty of every economy to conceptualize its efforts timely and reap the benefits of impending opportunities. The Union Budget 2023 of Mrs. Nirmala Sitharaman, Union Finance Minister of India, was designed to make the most of the Amrit Kaal, which the Indian economy is going through. Amrit Kaal translates to a period of prosperity, development, innovation, profitability, pleasure, and peace. While some sectors of the economy are directly placed to benefit from these attributes, others find their profitability as indirect or collateral benefactors. One such benefactor is our tubes and pipes industry.
According to budgetary announcements, the tubes and pipes will experience an increase in demand across all sub-sectors, irrespective of forming metal. The demand growth is expected to accelerate in multipliers, and the major drivers are:

  • INR 10,00,000 crore of Capital Expenditure has been allocated in the FY23-24 budget, which is 36.7 percent more than last year’s allocation of INR 7,30,000 crores. The allotment has increased by almost 2x over the span of two years. It fuels the overall infrastructural growth of the economy, wherein tubes and pipes find immense applications.
  • The FY23-24 Jal Jeevan Mission investment amounts to INR 70,000 crores. In the previous year, the mission successfully integrated nine crore rural households within the drinking water supply grid.
  • The government allotted capital support of INR 30,000 crore to state-run oil refining-cum-fuel retailing companies in 2023-24.
  • The Union Budget 2023-24 has allocated an enhanced outlay of INR 2,70,000 crores for the highways sector.
  • The Pradhan Mantri Awas Yojna scheme allotment for FY 23-24 is INR 79,590 crores.
  • This budget has also announced an investment of INR 5,943 crores for Eklavya-model residential schools, which shall include infrastructure, drinking water, connectivity, and sanitization.
  • Pradhan Mantri Particularly Vulnerable Tribal Groups (PVTG) Development Mission is also on paper. PM PVTG shall include actions toward housing, water and sanitation, power connectivity, etc.
  • Urban Infrastructure Development Fund (UIDF) is planned for Tier II and Tier III cities.
  • The union government shall also provide financial assistance for sustainable micro irrigation in the drought-prone regions of Karnataka.

Ascertaining the importance of these announcements for the industry players, Tube & Pipe India initiated a dialogue with the major companies to get a real-time picture of the expected impact. These interpretations not only confirm the general expectations but also drive the industry to gear up as their role gains more importance in the Indian economy.

The pipe industry has grown in leaps and bounds, thereby becoming one of the imperative drivers of growth in the country. This growth phase is going to continue with the budget announcement of INR 1,50,000 crores for both Infrastructure development and JJM Schemes. Additional roads, buildings, industrial sheds, and logistic hubs, will all lead to an increase in demand for pipes.

jindal hissar
Mr. Sunil Jain, Director & CEO, Jindal Industries Private Limited (Hissar)

JIPL Hissar is a well-established brand synonymous with unparalleled quality and timely delivery in the ERW pipes & infrastructure sector. We have already been a major supplier in the past years in JJM Scheme in UP, HP, Jammu, and Rajasthan and are further gearing up to be on board in the upcoming government schemes. We are expecting a major demand boost with an infrastructure push from the Government and for the pipe industry JJM (Ghar Ghar Jal) has been a big demand booster.

Jindal Hissar will be putting up a green field plant in the South to meet the increasing demand for pipes. We already have a presence in the East, and North; through our manufacturing facility in the South, we will be able to service customers efficiently, especially ones with a pan-India presence. We are also exploring possibilities to set up a facility in West India as well, and will soon finalize the manufacturing project there as well. Our plants will be in close proximity to Jindal Group’s hot-rolling steel plants so that response times can be further improved.

utkrash india
Mr. Utkarsh Bansal, Director, Utkarsh India Limited

In the Union Budget 2023, Finance Minister Nirmala Sitharaman outlined seven main targets under the ‘Saptrishi’ mantras, with infrastructure and investment predominating. The clubbing of infrastructure and investments in one of the seven priorities is one of the primary features, along with the second and third highest allocations for Highways and Railways at INR 2,70,000 crores and INR 2,41,000 crores respectively, after the highest allocation for the Ministry of Defence. Among the initiatives being taken is the development of the Infrastructure Finance Secretariat to encourage increased private investment in infrastructure, including trains, highways, urban infrastructure, and power. There is also a focus on reviving 50 additional airports, heliports, water aerodromes, and advanced landing groundings for improving regional air connectivity. One hundred essential transport infrastructure projects for last and first-mile connections for ports, coal, steel, fertilizers, and food grains industries have been highlighted to significantly boost India’s logistics industry. Moreover, the PM Gati Shakti National Master Plan portal is now fully operational having the Department for Promotion of Industry & Internal Trade as the key entity for the seven engines: Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics infrastructure.

It is very encouraging to see the investments that have been planned by the government in the various fields of infrastructure. This will not only add to the growth of the country but also allow industries like ours which directly contribute towards infrastructure to grow.

Utkarsh India is one of the backbones of Indian infrastructure across highways, railways, water supply, and construction through various product verticals.

Among other points is the National Highways Authority of India’s launch of the Pune-Bengaluru Greenfield Expressway Project at an estimated cost of INR 50,000 crores, approval of the Somasila- Siddheshwaram cable-stayed-cum-suspension bridge project (NH-167K) at an estimated cost of INR 1,082 crores, and the Jabalpur Ring Road Project at a cost of INR 3,600 crores. Among the road projects, funds were approved and sanctioned for the Phagwara-Hoshiarpur Four Laning Road Project (NH-344B) and the Balikuda-Mulakani Two Laning Road Project (NH-55).

The revamp of the New Delhi Railway Station, Ahmedabad Railway Station, and Chhatrapati Shivaji Maharaj Terminus Mumbai, at INR 10,000 crores was also approved. Under Project Sampark, the Centre sanctioned funds of INR 562 crores for the Akhnoor-Tain Br-Poonch two or four-lane road project (NH-144A) as well.

The Union Government approved the implementation of the Saraighat rail-cum-road overbridge project connecting the north bank with Guwahati on the south bank of the Brahmaputra River in Assam, at an estimated cost of INR 997 crores.

There are also plans to construct new transmission lines to meet the 2030 target of 500 GW of renewable energy capacity. With states accounting for 20-25 percent of the overall infrastructure spending, the Budget has also considered an increase of over 30 percent in allocation to the scheme for special assistance to states for capital investment. The government plans to set up digital public infrastructure as an open source, open standard, and interoperable public good to enable inclusive, farmer-centric solutions, and give a boost to the agricultural sector. It will also continue to focus on financial support for digital payments.

maharashtra seamless
Mr. Shiv Kumar Singhal, President – Commercial, Maharashtra Seamless Limited

Union Budget 2023 will have an indirect impact on raising the overall demand for the tubes and pipes industry. For instance, an increase in expenditure growth in the oil & gas sector by 27 percent, amounting to approximately INR 1,11,000 crores.

We, Maharashtra Seamless Limited (D.P. Jindal Group Company), are engaged in the manufacture of seamless pipes (1/2 inch to 20 inches) and ERW pipes (8 inches to 20 inches). Our group’s company, Jindal Pipes Limited, manufactures ERW pipes (1/2 inch to 14 inches). Growth in infrastructure & real estate is expected in line with the strengthening of the local economy. It proposes more commercial, residential, and retail development for tier II and tier III cities. Municipal or government bodies will also be able to raise more funds, and all these will have a cumulative impact on the real estate sector as well as infrastructure development like Smart Cities, Roads, Bridges, Highways, Ports, etc. Housing for all with the PM Awas Yojana and the extended Credit-Linked Subsidy Scheme (CLSS) will further boost the real estate sector. As a means of addressing this gap in affordability, the central government will further boost its initiative to provide affordable housing. Increasing the outlay for PM Awas Yojana by 66 percent the Union Budget 2023 has provided the real estate sector with crucial support and incentives. All these three schemes, that is Har Ghar Jal Scheme to supply piped water, affordable housing to all, and the best infrastructure will generate more demands for tubes & pipes in MEP, ducting, Conduit, Sewage, and drinking water supply.

Also Read: Gallium Equipment to Come Up with New Plant

About 50 percent of the overall expenditure in the oil & gas sector will go into the expansion of refining capacity, 44 percent for exploration and production, and the balance into distribution. All these three areas will drive huge demand for seamless pipes. As our major trust is in this sector and we have been regularly supplying Seamless Production Casings, Tubings, and Line Pipes to all state-owned oil companies like ONGC.OIL, IOCL, BPCL, HPCL, GAIL, etc., we will be a major supplier of the market for Steel Pipe Seamless & ERW in this growth story. We are fully equipped and geared up with our increased production plans in all shifts to meet the increased demands, at a rate of 10-12 percent, in FY 2023-2024.

bhushan tubes
Mr. Gaurav Mittal, Managing Director, Bhushan Tubes Private Limited

The targeted focus of Government on increasing spending in the infrastructure sector will certainly create mega multiplier effect by generating demand for its input material like coal, cement, heavy machinery, and iron ore, alongwith creating mass level job opportunities in these sectors. It is bound to attract investment as well in the pipe and tube industry, which will further give impetus to this sector which has been a laggard since long. Further looking at the plethora of industries who use tubes and pipes as their input or ancillary product, the impact on this industry is surely expected to benefit from all dimensions.

We have been quite positive on the demand outlook ever since Covid-19 started to phase down. We started bolstering our own infrastructure and human resource strength in last two years to keep up with the expected pace of growth and have developed separate wings to cater to the behaviour patterns and needs of customers in different sectors. Furthermore, we have come up with storage yards in Eastern and Southern parts of the country to ramp up the stock levels. Most importantly we have secured additional working capital arrangements from financial institutions to keep us prepared for exciting opportunities that lie ahead.

shah steel tubes
Mr. Sapan Shah, Director, Shah Steel & Tubes

Government lead projects, especially infrastructure projects, are the largest consumer of steel and cement in India. Relying on the numbers coming out of the FY 23-24 budget, it is clear that the government is ready for the infrastructure push and it is now the responsibility of the Indian steel pipes & tubes industry to show their readiness to support this ambitious plan.

Extended lead times have always been a big thorn in infrastructure projects. Shah Steel & Tubes, as the super stockists of steel pipes and multiple stockyards across the country, is ready to meet this added demand by keeping its stock capacities at the highest level, especially with products that are used in infrastructure projects. By cutting the lead time, projects can be executed faster and end up saving a lot of taxpayers’ money.

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