LPG price hike hits Gujarat's Sanand GIDC, production drops by 20%

Production in Gujarat's Sanand GIDC has dropped 20-25% after a commercial LPG price hike caused fuel shortages. A CRISIL report warns that the West Asia conflict and rising energy costs pose further risks to industrial output.

Industrial production in Gujarat's Sanand GIDC has declined following an increase in commercial LPG cylinder prices, with units reporting disruptions due to fuel shortages, an industry representative said.

Production Declines Amid Fuel Shortages

Ajit Shah, President of Sanand GIDC, said, "There has been a decline in production. For instance, if my production output today stands at 100 units, it has now dropped to around 80 units."

He attributed the slowdown to supply issues affecting operations, stating, "The reason for this is that my operational lines, specifically the welding lines or other cutting lines, are experiencing severe shortages."

Highlighting the broader impact on engineering units, Shah added, "Engineering units using LPG in production have seen a 20-25% decrease."

The rise in commercial LPG prices has raised concerns among industrial units, particularly those dependent on gas for manufacturing processes, as supply constraints and higher input costs continue to affect output.

CRISIL Warns of Risks to Industrial Momentum

A recent report by the rating agency CRISIL also flagged emerging risks that could weigh on industrial momentum. "A combination of higher prices and tighter supply of critical inputs due to the ongoing conflict in West Asia has imposed downside risks to industrial output," it said.

Energy costs, in particular, have become a growing concern for manufacturers. "The surge in energy prices is another key challenge faced by manufacturers... Rising input costs are emerging as a key pressure point, and uneven pricing power across firms may limit their ability to fully pass through costs," the report added.

The report also highlighted that gas availability constraints could disrupt output in sectors dependent on such inputs, with supplies being rationed.

Domestic Demand Provides Cushion

Despite these headwinds, domestic demand continues to provide some cushion. "Healthy domestic demand scenario, though, provides a crucial buffer currently," it noted.

Crisil further cautioned that prolonged geopolitical uncertainties, particularly in West Asia, could impact investment decisions and delay recovery in private sector spending.

Overall, while manufacturing-led growth has kept industrial output resilient, rising energy prices and supply-side constraints remain key risks going forward.

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)