The Hindu Business Line : ‘Industry keen to switch over to non-oil technology’

New Delhi, Jan. 22 With the international crude oil prices touching the $100-per-barrel mark, a large section of the domestic industry is contemplating to adopt energy-efficient, non-oil technologies to counter the rising oil prices.

The industry wants the Government to set up a new fund to provide subsidised loans to enable them to switch over to these new technologies, according to the findings of a survey conducted by the Federation of Indian Chamber of Commerce and Industries (Ficci).

The Ficci survey on ‘Emerging Oil Price Scenario and the Indian Industry’ covered 163 companies spread over various sectors and different geographical areas, and having different oil consumption intensities.

According to the survey, while Indian companies adjusted themselves to the high price scenario by adopting medium to long term strategies, they have suggested that the Government announce a new fund in the forthcoming Budget that will provide subsidised loans to industry for switching over to energy-efficient technologies.

Such a move by the Government would give impetus to the efforts of companies to invest in energy-saving technologies and equipment, the survey said.

Severe impact seen

Responding to a question on how the oil price rise would impact their own industry, nearly 50 per cent of the companies surveyed said that the impact on their own industry would be severe.

While another 33 per cent reported that the impact on their industry would be moderate, the remaining 17 per cent opined that their industries would not be affected much by the current rise in oil prices.

The respondents who reported that their industry would be strongly hit by the increasing price of oil and oil products primarily belonged to alkali chemicals, fertilisers, iron and steel, glass, cotton textiles, synthetic textiles, plastic and plastic products, castings and forging, and logistics sectors.

Cost to company

The survey also noted that for a vast majority of the companies, energy costs is only a small fraction of their total cost — it accounts for less than 20 per cent of the total cost of production.

Around 49 per cent of the reporting companies said that energy costs constitute less than 10 per cent of their total cost.

Another 31 per cent reported that their energy bill accounts for 10 per cent to 20 per cent of the total cost of production.

There are, however, segments where the energy costs as a proportion of cost of production are much higher and these include sectors such as plastic and plastic products, glass, fertilisers, logistics, iron and steel, metal products, non-metallic mineral products and alkali chemicals, the survey pointed out.

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