Indian Tubes Industry set to grow at30%, faces threat from China

New Delhi, Sep 12 (UNI) The Rs 18,000 crore Indian tubes industry, is expected to grow by 30 per cent in the next three years, riding on the growth witnessed in the steel, automobiles, oil&gas, infrastructure, construction, and boilers sectors.

However, Chinese tube manufacturers are slowly but surely gaining ground in exclusive Indian markets like Srilanka, Thailand, and Saudi Arabia, primarily due to the support from their Governments in terms of cheaper power, labour and almost free infrastructural facilities, coupled with large scale capacities.

Unless the Indian manufacturers start innovating their manufacturing processes, the Indian industry faces a serious threat.

Estimates indicate that for every Rs one crore investment in pipeline layout, nearly 290 industries in the construction sector get activated, apart from the core manufacturing sector of steel.

The consequent employment opportunities generated is of the order of nearly 750 man-years, of which approximately one-tenth is proportioned directly to the tubes sector.

In India, the growth of the urban population in the last decade indicates higher growth for metro cities. There are six mega cities and 23 metropolitan cities in the country, which are expected to increase to 40 by 2008. There are also 300 large towns and 3,396 small and medium towns.

The current pace of economic growth and urbanisation in India will see greater urbanisation leading to tremendous demand for expansion of the steel and oil and gas network and improvement of infrastructure, to cater to a higher population and volume of trade.

This expansion is estimated to require a total investment of Rs 13,137,00 crore in the next five years. If additional construction requirements are added, the total fund requirement would be Rs 15,000,00 crore, of which at least Rs 1,50,000 crore would be reaped by the tubes industry.

With additional construction requirements, the total fund requirement would be Rs 15,00,000 crore, of which at least Rs 1,50,000 crore would be reaped by the tubes industry.

However, there are still some challenges that the tubes industry needs to overcome before it can become truly globally competitive.

In India due to the lack of incentives, tube companies do not spend even one tenth of what international companies spend, and their R&D spendings, in terms of percentage of sales and in absolute terms, is negligible.

The steel industry is the single largest supplier to the tubes industry, supplying more than 80 per cent of the raw material. It also accounts for more than 70 per cent of the cost component for tubes. It is thus essential for the tube industry to understand the developments in the Indian steel sector, so that they can gear up to face the challenges in the near future, especially in a situation where the largest user sector, the oil and gas sector, has over the last few years been regularly outsourcing its tube requirements to countries like Japan and Germany.

The reason for this outsourcing is ostentatiously that the technology for catering to the oil and gas sector is not present in the country, whereas the tubes industry claims that while the technology is available, there is a shortage in availability of tube grade steel.

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