Metals Sector Budget 2026: Will Tata Steel, Hindalco Gain?

Introduction: High Stakes for Metals in Budget 2026

The Indian metals and mining sector is keenly awaiting the Union Budget 2026, with a comprehensive list of expectations aimed at bolstering domestic production, curbing import pressures, and reducing input costs. Industry bodies and market analysts have highlighted the need for strategic policy interventions, particularly concerning customs duties and raw material security. The budget's provisions could significantly impact the profitability and growth trajectory of key players such as Tata Steel, Hindalco Industries, NALCO, Vedanta, and SAIL.

The Core Demand: A Recalibration of Customs Duties

A primary focus for the sector is the restructuring of import and export duties. The Aluminium Association of India (AAI) has strongly advocated for a uniform 15% basic customs duty on all aluminum products, including scrap. The current duty structure ranges from 2.5% to 10%, which the industry argues makes India a target for dumping. A higher, uniform duty would enhance the pricing power of domestic producers like Hindalco, NALCO, and Vedanta, directly improving their margins.

Simultaneously, aluminum producers are seeking a reduction in customs duty on critical raw materials such as calcined pet coke, raw pet coke, aluminum fluoride, and caustic soda. Any relief on this front would lower the cost of production, providing a significant operational boost.

For the steel industry, the Indian Steel Association (ISA) has called for the reduction or complete removal of the 2.5% basic customs duty on coking coal, a key raw material that is largely imported. This measure would directly benefit major steelmakers, including Tata Steel, JSW Steel, and SAIL, by lowering their input costs and enhancing competitiveness.

Policy Push for Raw Material Security

Beyond duties, the sector is looking for policy support to secure raw materials and promote exports. The Federation of Indian Mineral Industries (FIMI) has urged the government to remove export duties on low-grade iron ore. Such a move would improve price realization for miners and is seen as particularly beneficial for state-run NMDC.

There is also strong anticipation for a new policy aimed at reducing India's import reliance on critical minerals like silver, copper, and zinc. The budget is expected to introduce measures to increase private sector participation in mining and processing. This aligns with the 'Make in India' initiative and would be a positive for companies like Hindustan Zinc and Hindustan Copper.

Furthermore, the government is expected to lay the groundwork for a domestic ecosystem for Rare Earth Elements (REEs), which are vital for high-tech sectors like electric vehicles and electronics. While this is a long-term goal, initial incentives for prospecting and refining could be announced.

Summary of Key Sector Expectations from Union Budget 2026

Infrastructure Spending: The Underlying Demand Driver

Continuing the trend from previous years, the Union Budget 2026 is expected to maintain its strong focus on infrastructure development. A higher capital expenditure outlay for roads, railways, and urban construction directly translates into robust demand for steel and aluminum. This sustained government spending provides a stable demand floor for the entire metals industry, supporting volumes for all major producers.

Analyst Commentary and Market Outlook

Market analysts are closely watching for these announcements. Antique Stock Broking has noted that a duty hike on aluminum would directly improve profitability for domestic players. Similarly, a cut in coking coal duty is a clear positive for steel producers' cost structures. Axis Securities expects the budget to be positive for the sector, highlighting the potential new mining policy to cut imports as a key structural reform.

The industry also hopes for fiscal incentives to support decarbonisation efforts, such as promoting hydrogen-based steelmaking technologies and providing concessional green financing. These measures are crucial for the long-term sustainability and global competitiveness of Indian metal producers.

Conclusion: A Budget of Strategic Importance

Union Budget 2026 holds the potential to be a landmark event for the metals and mining sector. The industry's expectations are clear: create a level playing field through rationalized customs duties, reduce the cost burden from imported raw materials, and provide a policy framework that encourages domestic production and value addition. The announcements made on February 1st will determine whether the sector receives the necessary support to navigate global headwinds and capitalize on India's strong domestic growth story.