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Steel ministry clarifications on purchase preference: Misguided approach
Jul 21: A set of clarifications issued by the ministry of steel to queries on the notification that provides purchase preference to domestically manufactured iron and steel products will push the cost curve significantly upwards for the oil and gas industry
8Steel and iron constitute a significant portion of the cost element in the oil and gas industry.
8Value addition has been differently defined, and a bare steel pipe cannot be imported anymore, as processes like coating beyond finished iron and steel products will not be counted as value addition.
8Then again, welding, multistart thread connectors and fittings will not be counted towards value addition.
8This makes it an uneven field entirely, and foreign suppliers will have to entirely keep away from the Indian market.
8Eventually, given that India has a limited number of steel pipe suppliers, price cartelization cannot be ruled out, when there is no fear of cheaper imports
8If Make in India is a hark back to the indigenization programme or import substitution efforts launched when India was terribly short of foreign exchange, it will have a detrimental overall impact on the Indian industry, with the cost curve going up across the board.
8Keeping competitive forces at bay or under leash will not do the economy or the oil industry any good in the long run.
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