The hospitality industry is not the only sector impacted by the shortage of commercial gas triggered by the West Asia conflict. Production units across durables, auto components, glass and ceramics, packaged food, steel and tyres are also feeling the strain. Commercial gas is widely used in manufacturing processes ranging from forging and casting to brazing, soldering, painting, and blast-furnace and smelter operations.
Executives across these sectors have told FE that an inadequate supply of gas to commercial units will hamper production from April onwards, as storing gas is risky given its highly inflammable nature. The shortage, coupled with a spike in commodity, packaging and freight costs, has also put corporate India in a tight spot as price hikes will have to be undertaken from April to cushion the impact on margins. This could hurt demand just as it was beginning to stabilise following the GST 2.0 reforms introduced in September.
Production Halts
Small steel makers such as Triveni Iron and Steel Industries said production cuts could be as high as 50% if the gas shortage is not addressed within the next week. Small steel makers have also written to the steel ministry, urging it to address the issue on a priority basis, warning that production could come to a complete halt next month if the shortage remains unresolved.
“Clarity on the allocation percentage for industrial propane/LPG and natural gas, along with assurance of regular supplies, will be important for the stainless steel industry to plan and optimise operations. In the absence of such clarity, we foresee a cascading effect across the industry, the severity of which will depend on how quickly these issues are resolved,” Abhyuday Jindal, MD, Jindal Stainless, said on Friday, adding that the plant is operating at rationalised capacity given the constraints on fuel availability.
Cement makers, meanwhile, have warned of a sharp increase in packaging costs due to the West Asia crisis. Analysts and industry stakeholders have already called out a margin impact from Q1FY27, if the fuel crisis persists, since raw material stockpiles (which last for around 30-45 days) will get exhausted by then.
From Auto Parts to Snacks
“Most durable firms use commercial gas for brazing purposes, which is a metal-joining process. While most firms may be able to pull on till the end of March, there will be production challenges in April, if the shortage of gas persists. This coupled with rising commodity costs will mean that products that are rolled out in the April-May period will come at a higher price tag,” Kamal Nandi, business head & executive vice-president, appliances business, Godrej Enterprises Group, said.
Vinnie Mehta, director-general of the Automotive Component Manufacturers Association of India (ACMA), said the disruption in availability of commercial gas would hurt casting and forging industries, which are the backbone of the auto component sector.
“It is definitely going to be a tough time for the forging industry,” said S Muralishankar, executive vice-chairman of Chennai-based Super Auto Forge, one of India’s largest manufacturers of cold and warm forged steel and aluminium parts supplying to companies such as ABB, Stellantis and Bosch. “LPG is used for heat-driven processes such as die-casting and nitro-carburising. We also use gases like acetylene and helium, so the shortage will have an impact. We are in talks with the government and should have a clearer picture by the end of the week,” he added.
Arun Mammen, chairman, Automotive Tyre Manufacturers Association (ATMA), said that the current challenges in manufacturing would hurt export competitiveness. “For the Indian tyre industry, the combined impact of rising input costs, freight disruptions and export uncertainties could affect competitiveness in international markets.”
Food companies such as Parle Products, which manufactures both biscuits and snacks, told FE that production at units using LPG for frying had been halted.
“We are considering alternative fuels. At the same time, these fuels, such as biofuels, are not easily available as demand has shot up,” said Mayank Shah, vice-president at Parle Products.
Executives at Balaji Wafers, Gopal Snacks and Bikaji Foods said that they were switching to induction cooktops and fryers to tide over the shortage of gas. But these come with its own set of challenges as power consumption increases with the usage of electrical equipment, pushing up power bills.
Executives at container glass manufacturer Hindusthan National Glass & Industries (HNGIL) said they had written to the petroleum ministry seeking uninterrupted supply of industrial gas. HNGIL said a disruption in operations could affect supplies to sectors such as pharmaceuticals and food and beverages, which depend on container glass packaging.