Auto, Steel MSMEs Hit By Gas Supply Disruption Amid West Asia Conflict; Production Costs Likely To Rise

The disruption of gas supplies caused by the ongoing conflict in West Asia is beginning to affect manufacturing operations in India, particularly among Micro, Small and Medium Enterprises (MSMEs) in sectors such as automobiles, steel, and engineering goods.

Industry bodies including the Society of Indian Automobile Manufacturers and the Automotive Component Manufacturers Association of India have urged the government to ensure uninterrupted gas supply. They warned that continued shortages could disrupt production, raise operational costs, and eventually lead to higher automobile prices.

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Abhyudaya Jindal said stainless steel manufacturing units rely heavily on fuels such as propane, LPG, and other natural gases. According to him, disruptions in gas supply have already begun affecting production at several facilities.

He added that most stainless steel units do not operate captive power plants and depend entirely on gas for their manufacturing processes.

Gas is also widely used in the production of cement, ceramics, and various engineering goods. Auto component manufacturers in Faridabad said sourcing gas through alternative channels would significantly increase costs.

Manufacturers noted that they supply parts to automobile and two-wheeler companies at pre-agreed prices, leaving little room to absorb higher fuel costs.

Carmakers and suppliers have warned that prolonged gas shortages could slow production and raise overall manufacturing expenses. Gas has long been a critical energy source in manufacturing plants for processes such as metal melting and other industrial operations.

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MSMEs engaged in engineering goods manufacturing said that if the shortage continues, they may be forced to temporarily halt production. Industry representatives also cautioned that prolonged disruptions could affect employment, particularly for temporary workers whose numbers are often adjusted based on production levels.

In response to the emerging crisis, the government has instructed oil and gas companies to prioritise supplies of LPG and PNG for domestic consumers to ensure essential availability.