What has aggravated the problem for pipe manufacturers is that India was exporting close to 50 per cent of its production to the US, Iran, Mexico, Saudi Arabia, Bolivia, etc., but most of these countries have raised trade barriers to contain imports to encourage their domestic industry, thus impacting exports from India.
“With the government’s massive investments in infrastructure in the laying of pipelines, domestic manufacturers are aspiring for some major relief even though the total requirement of pipes for these projects if far less than their combined production capacity,” Mehta said.
The government has come out with a recent notification on a policy for providing preference to domestically manufactured iron and steel products in government procurement. Mehta, however, pointed out that it would not apply to EPC (engineering procurement construction) contracts. “The oil and gas PSUs should be made to restrict the procurement of their requirement for pipes from domestic sources only,” Mehta suggested.
He said the Chinese suppliers were entitled to incentives from the government, enjoyed lower cost of funds and lower logistic cost compared to the Indian counterparts. “The price difference between Indian and foreign suppliers is not very big but they outbid us on the back of export incentives that they get from their country,” he added.