Friends, you must have noticed these steel pipes in any home, restaurant or airport trolleys, waiting areas, benches and in the metropolis. Yes, they are an indispensable part everywhere like construction, doors, automobile manufacturing, gas pipelines, agriculture and urban water supply. Moreover, with India’s growing economy and infrastructure development, the demand for these steel pipes is continuously increasing. Also, according to a report, our India is the second largest global crude steel producer in the world, yes, the steel pipe market in India is estimated up to ₹55,000 crore and it is growing at 8 to 10 percent every year. So, if you are looking to step into an industry with immense growth and immense potential, steel pipe manufacturing can be a great option for you. So in this article, we will help you understand the entire process of starting this business, including market size, cost, licenses, and marketing tips.
Table of Contents
Market Size, Future, and Scope
India’s steel pipe and tube market is on a strong growth trajectory, driven by the country’s growing industrial and infrastructure needs. Yes, the growing demand from the oil and gas sector is a major driver, and rapid development of infrastructure including construction of bridges, structures and water supply systems and urbanization are also driving the demand. Apart from that, in 2023, the size of the Indian steel pipe and tube market is estimated to be worth USD 33 billion.
This market is expected to grow at a compound annual growth rate (CAGR) of 6.45% and reach USD 37.69 billion by 2030. Moreover, there is a steady demand for pipes due to the increasing automobile production and expansion of assembly lines in India. This indicates a strong market in the local market as well, and in the coming times, the sector is expected to grow rapidly with not only domestic demand but also export opportunities.
Required Machinery & Equipment
The machinery required to start your own steel pipe manufacturing business varies depending on the type of steel pipe you want to manufacture. The essential machinery for pipe manufacturing includes an uncoiler, shear butt welder, strip accumulator, solid-state welder, tube mill, weld bead grinder, feeding furnaces, boring mills, rolling and sizing mills, cooling beds, straighteners, testing units, cutting machines, and release platform. Additionally, optional units such as straighteners, hydro testers, and bundling machines enhance the efficiency. You can buy these machines from India and China. You can find sellers on B2B portals like Indiamart, Tradeindia, and Alibaba. Get quotes from these companies, check their reliability, and read reviews from other customers.
Required Raw Materials
The main raw material for manufacturing steel pipes is steel, which depends on the type of pipe. For ERW pipes, mainly hot rolled (HR) steel coils are required. For seamless pipes, solid steel billets (round or square) are used. To get this raw material, you can either buy directly from major steel manufacturers in India or get the materials through B2B websites like Indiamart, Alibaba and Tradeindia. Also, choosing good-quality raw materials is very important for the quality and durability of your product. Therefore, it is also wise to establish relationships with multiple suppliers to ensure regular supplies.
Manufacturing Process
Now, let’s take a closer look at how these steel pipes are manufactured.The process starts with perforated coils as raw material, which are carefully loaded using cranes capable of avoiding operational damage. Then, after unwinding the coils, the slit moves through various heavy roll sets and welding machines, where TIG welding for seamless joints takes place. Next, buffing wheels then remove any imperfections, followed by the application of cutting oil to maintain consistent quality. Then, a limit determines the pipe length, usually 12 or 15 feet, before final cutting. After, the pipes undergo a rigorous inspection process, where the defective ones are rejected and sent for recycling. Next, once approved, the pipes are moved to the polishing plant for a mirror finish. Finally, each pipe is stamped with the company’s branding, color-coded, and packaged, ensuring that the final product is ready for the market.
Licenses & Compliance
Now let’s talk about the licenses and permits required to start a steel pipe manufacturing business in India. First, a factory license is required to start a manufacturing business. Also, registering as a Micro, Small and Medium Enterprise (MSME) allows you to avail several government schemes and incentives. Next, a trade license is required, which is issued by the local municipality. In addition, BIS certification, and registration under Goods and Services Tax (GST) are mandatory. Also, a No Objection Certificate (NOC) from the Pollution Control Board and, for fire safety measures, a No Objection Certificate (NOC) from the Fire Department are required. It takes time to obtain all these licenses and permits, so it is important to start the process early.
Location & Factory Setup
Talking about the space requirement, a small to medium-sized steel pipe manufacturing plant may require around 10,000 sq ft to 30,000 sq ft of space. This includes the production area, storage area for raw materials and finished products, office space, quality control laboratory, space for machinery, and sufficient free space for vehicle movement. Apart from that, you should choose a location that is close to raw material suppliers and has easy access to skilled workers, and has good transportation facilities to transport the finished products to the market. Therefore, choosing the right location for this steel pipe manufacturing unit is very important.
Cost Breakdown
The cost of starting a steel pipe manufacturing business varies depending on the size and production capacity, with a small to medium-sized setup typically requiring an initial investment of ₹50 lakh to ₹1crore. And a large-scale manufacturing unit may require even 2 crore or more investment. Overall, a significant capital investment is required to start a sustainable and scalable steel pipe manufacturing unit. However, government support is also available under the PMEGP schemes in India, where you can get subsidies of up to 40% on machinery if you own the land. Otherwise, you may be eligible for a loan of ₹25 lakh with significant subsidy benefits up to ₹65 lakh within three years.
Marketing Tips
Effective marketing strategies are crucial to attracting customers, building brand reputation, and increasing sales in this steel pipe manufacturing business. So, create a professional website that showcases your products, manufacturing capabilities, standards, and contact details, and then, run targeted Google Ads and LinkedIn Ads. Most importantly, your customers will be construction companies, engineering firms, government contractors, and other industries, so join local industry associations and build relationships with construction contractors, engineers, and government officials. Finally, attending trade shows is a great way to make new contacts and understand industry trends.
Profit Margins
The profit margin in this steel pipe manufacturing industry varies depending on factors such as raw material price, selling price, operational efficiency and market demand. Generally, profit margins range from 2% to 5%. For example, if your plant produces 100 tonnes of ERW steel pipes per month at a production cost of ₹60,000 per tonne, your total cost would be ₹60 lakh. Then, if these pipes are sold at a selling price of ₹63,000 per tonne, your monthly revenue would be ₹63 lakh, resulting in a profit of ₹3 lakh. However, this may vary depending on the specific product and market conditions. By focusing on higher production volumes and improved operational efficiency, profit margins can be improved.
Find More
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