CHENNAI: With the government deciding to cut gas supply to industries by up to 50%, the manufacturing sector has begun feeling the pinch, with concerns emerging over potential production disruptions.
Last week, Blue Star Managing Director B Thiagarajan said the company had received a communication from the Centre about the reduction in gas supply to industries. “We have got a communication asking us to store gas only for two days, and we have also warned of possible disruption. The government has constituted a committee to look into it, but the top priority for them is restaurants, hotels and domestic consumers,” he said.
Small automobile companies have also been alerted by suppliers about a potential gas shortage for at least 30 days. Dinesh Arjun, CEO and co-founder of Chennai-based Raptee EV, said, “We have been warned by our suppliers that there could be a shortage for 30-60 days. Every large component requires gas. Heat-treatment plants will be the most affected. Any component that comes to the manufacturing plant has to go through heat treatment. We have challenges from plastics to metal components. We don’t know what the scale of the impact will be.”
However, supply has not been stopped yet, though companies expect a lean period ahead.
MSMEs in the Ambattur Industrial Estate have largely shifted to electrical heating mechanisms over the years, but industries such as casting, fabrication and foundries may face disruptions. Balachandran, an MSME owner in the estate, said: “Companies involved in casting, fabrication and foundries will be affected. To assess the real impact we will have to wait another 10–15 days, when the shortage of LPG and LNG supply will be felt. However, most manufacturing units in Ambattur have already moved from gas to electrical heating.”
Dr Arulkumar Shanmugasundaram, CEO of Swelect Energy Systems, said the shortage could also affect input costs. “Based on quotes from our suppliers, we see an impact on pricing of steel, aluminium and also galvanisation of steel. The impact may be a combination of oil, coking coal and LNG pricing. As of now availability is there, but if LNG supplies for industry drop there may also be longer lead times beyond price impact,” he said.
M Karthikeyan, president of the Coimbatore District Small Industries Association (CODISSIA), said the fabrication industry alone accounts for about 15% of Coimbatore’s industrial base and depends heavily on LPG supply. “Earlier, aluminium casting units used furnace oil, but now many have shifted to electrical heating. However, all kinds of raw materials, including steel and polymers, have increased by nearly 25% in the last two weeks,” he said.
He added that commercial LPG cylinders have not been supplied to some industries in recent days. “Companies are switching to electrical heating wherever possible, which will increase power costs. We have asked the state government to reduce fixed power charges. Due to lower gas supply, industries may also have to request state discoms to sanction additional power load.”
CODISSIA has also urged the Union government to allow a 25% subsidy for rooftop solar installations for industrial use. “This will reduce our costs in the future and promote private investment in renewable energy,” Karthikeyan said.
The gas shortage has also disrupted operations at some steel plants of the JSW Group. According to a Reuters report, disruptions to fuel supplies and maritime operations have started affecting operational stability and supply chains. As a result, JSW Steel Coated Products risks missing sales and supply obligations for tinplate under the government’s production-linked incentive (PLI) scheme and has sought a six-month extension.
Last Friday, Jindal Stainless Managing Director Abhyuday Jindal said, “Due to the heavy dependence of stainless steel manufacturing on industrial gases such as propane/LPG and natural gas, several processes across our plants have been adversely impacted.”
