ToI reports that the in Kutch, a major hub for line pipe production used in oil, gas, and water transportation, manufacturers are expressing growing concerns about the sector's development. The region boasts an impressive installed annual capacity of 3.6 million metric tons, positioning itself as a critical player in the line pipe industry. However, a range of issues, particularly relating to raw material costs and import regulations, are hindering its growth.
A significant challenge stems from the reliance on American Petroleum Institute grade steel, a key raw material for producing line pipes. Due to its limited availability in India, this steel is primarily imported. Chintan Thaker, head of group corporate affairs and strategic planning at Welspun Group, highlighted a critical issue in the pricing dynamics. He pointed out that while the cost of iron ore and coking coal, essential for steel production, has fluctuated significantly, steel prices have not adjusted proportionately. For instance, in March 2022, the combined price of raw materials was Rs 58,166 per metric ton, with steel priced at Rs 71,000 per metric ton. By July 2024, although raw material costs had halved to Rs 28,000 per metric ton, steel prices had only reduced to Rs 53,000 per metric ton.
This discrepancy in pricing has been a source of frustration for manufacturers and was formally presented to HD Kumaraswamy, Union Minister for Steel and Heavy Industries, by the Federation of Kutch Industries Associations. The Federation, which represents all industries in Kutch and was established post-earthquake, underscores the pressing nature of these concerns. Nimish Phadke, Managing Director of FOKIA, emphasized the importance of infrastructure projects in driving economic growth. He noted that timely and reasonably priced raw materials are crucial for the swift execution and viability of these projects.
Another challenge affecting the line pipe industry is the import restrictions and the high cost of steel, which is critical for infrastructure development. Phadke pointed out that the unavailability of certain grades of steel in India and the high domestic prices compared to international markets further exacerbate the problem. The non-renewal of BIS (Bureau of Indian Standards) certification for foreign steel manufacturers is also a significant hurdle, making imports more expensive and allowing domestic producers to take advantage of the situation.
Manoj Sanghvi, Business and Unit Head at Ratnamani Steel, echoed these concerns, noting that the lack of BIS certification for imported steel is a major issue. This regulatory gap has led to higher import costs and an imbalance in market competition, disadvantaging both producers and consumers in the domestic market.
The line pipe industry's growth prospects in Kutch are thus under strain due to these multifaceted challenges. While the sector remains vital for infrastructure development and has substantial production capacity, addressing these concerns is essential for sustaining and enhancing its growth trajectory.
