Huge imports from China rob domestic ceramic makers of margins

 

With India importing close to Rs 2,700 crore ($497 million) worth ceramics from China, the domestic ceramic producers have been losing out on margins. So much so that smaller ceramic manufacturing units are almost on the verge of closure, says the latest study by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

As per the study, dumping of ceramic products by China in large numbers is adversely impacting profit margins of ceramic producers and manufacturers in India thereby pushing a number of smaller units on the verge of closure.
 
"The production of ceramics has been significantly falling short of prevailing local demand in India and despite making rapid strides for enhancing domestic production capabilities, China continues to be major supplier of ceramic products to India," the study, titled 'Indian Ceramic Industry: Challenges Ahead', stated.
 
"With a total import value worth over $497 million (Rs 2,700 crore roughly), China leads the countries importing ceramic products into India thereby accounting for a share of over 64% followed by Germany (over seven% share) and France (four% share)," said DS Rawat, national secretary general of ASSOCHAM while releasing the chamber's study.

The rate of growth for import of Chinese ceramics into India has substantially increased from just about eight% till a few years ago to over 42%, making it probably the only country producing more than its existing consumption of ceramics and therefore looks for export markets to sell its surplus production.
 
As for India, issues like freight, supply of power and gas have also been impacting Indian ceramic makers, apart form rise in raw material costs together with soaring fuel prices are other major problems faced by the industry. "Ceramics manufacturers are not able to pass on the rise in input costs to the consumers owing to the emerging competition from Chinese ceramic imports which further hurts their profitability and has even lead to closure of certain ceramic units unable to bear rising production costs," highlights the ASSOCHAM study.

The Rs 18,000 crore worth Indian ceramic tile industry consisting of floor tiles, vitrified tiles, porcelain tiles, wall tiles, industrial tiles and sanitaryware is highly fragmented comprising majority of small and medium enterprises (SMEs) and a very few large players.
 
The industrial cluster of Morbi near Ahmedabad in Gujarat commands about 70% of production of ceramics produced in India with an estimated annual turnover of over Rs 3,500 crore. There are over 250 units employing over 67,000 people in Morbi.
 
Though, the maximum ceramic units housed in Morbi belong to medium size category, it is the bigger units that generate maximum output.