With export opportunities for large diameter oil and gas pipes shrinking due to protectionism in key markets like the US and Iran, domestic manufacturers are lobbying with the government for mandatory usage of locally manufactured products in pipelines built by oil PSUs.
The industry has suggested the Centre use the newly inserted provision in the general financial rules (GFR) that empowers the government to promote locally manufactured goods.
According to sources, a delegation from the Indian Pipe Manufacturers Association (IPMA), whose members includes industry majors like Man Industries, Jindal Saw Pipes, Welspun Corporation, Ratnamani and Essar, recently met industrial policy and promotion (DIPP) secretary Ramesh Abhishek and handed over a memorandum to him.
As per an estimate, the industry has the capacity to manufacture 7 million tonnes pipes per annum half of which is exported.
But export opportunities have started drying up for domestic manufacturers as major importers are putting up barriers to promote their local industries.
For example, the US, a champion of free-trade until recently, has turned protectionist under the Donald Trump presidency. It has decided to use only locally manufactured pip-es in oil and gas projects.
Saudi Arabia, another leading destination for Indian pipes, has developed its own indigenous pipe industry to meet the oil and gas industry’s requirement. Iran and Mexico have made usage of local pipes mandatory for their pipeline industries. Bolivia has recently mandated that only firms with prior experience of bidding for pipeline projects in that country would be eligible to participate in tenders.
The government has imposed anti-dumping duty on steel products like HR plate and coil, used as raw material by the pipe industry. But it has not helped the pipe industry.
While Indian manufacturers are able to outgun Chinese suppliers in
overseas markets, they
are losing the domestic market to the latter because of the artificially inflated price of raw materials, said analysts.
According to industry sources, the sector provides direct and indirect employment to nearly 25,000. Besides, banks have Rs 15,000 crore exposure to the sector.
“The government should make it mandatory for oil PSUs to procure their pipes from domestic sources only. That would ensure optimum utilisation of local capacities and boost the government’s flagship programme of make in India”, said Vinod Mehta, secretary, IPMA.
