If increased input costs were not enough, the Morbi based ceramic industry is now reeling under decreased demand. With demand for ceramics down by 50 per cent, almost 30 percent of units in Morbi have been closed.
"Real estate is the main business source for ceramic industry and right now that very source is not doing well. Due to slowdown in the realty sector, demand for ceramics has declined by more than 50 per cent since last one month," said Tulsi Patel, president of Morbi–Dhuva Glaze Tiles Association. While demand has reduced for ceramics, inputs like gas, other raw materials and transportation have seen a rise in costs. Add to that, the recent hike in excise duty has also worsened the case for ceramic industry.
However, despite such issues, manufacturers are not going to increase prices of ceramic products. "We are not in a position to raise prices of our products as demand is not there and production is much higher than that. We fear that a price hike may deter more buyers," Patel added. The last time the ceramic industry in Morbi hiked product prices was in November 2011, which was by 7-10 per cent.
According to Patel, as against a production capacity of 2.2 million boxes per day, Morbi currently produces 1.2 to 1.5 million boxes a day wherein demand has dropped by one million boxes. "Pre budget, the industry had demanded a reduction in excise on ceramic product but the central government has increased the duty by two percent to 12 per cent. Due to rise in excise duty, Chinese ceramic products have also become cheaper which we fear will damage the Morbi-based ceramic industry further," said Patel. In India there are about 750 ceramic products manufacturers, out of which more than 500 units are located in the Morbi area of Gujarat. The total turnover of the Indian ceramic industry is about Rs 10,000 crore wherein Gujarat contributes about Rs 7000-8000 crore to it. The industry gives direct and indirect employment to the over 600,000 people across India.