HomeIndustry TrendsExports come to the rescue of Morbi tile makers

Exports come to the rescue of Morbi tile makers

Industry was about to write them off but the destiny had a different story to tell. This has brought out never say die attitude of Morbi tile makers who have crossed many such storms in the past and the latest one was the most enterprising to say the least.

GCC Interim order

One of the most disturbing negative news of recent times for tile makers in the country was the interim order of GCC to impose anti-dumping duty (ADD) ranging from 40%-106% on ceramic products imported from India in November last year. The order was to come into effect from 1st December 2019. In a big respite to tile makers in India, the GCC has put in abeyance its interim order to impose ADD on Indian tiles imports. GCC may be reluctant to impose the duty on Indian tiles immediately as ceramic production in China, the biggest exporter, has been impacted in the wake of the coronavirus epidemic.

The Indian government too had taken up the issue of ADD on several occasions at various levels with GCC and Saudi Arabia, the most recent one being at Davos on the sidelines of World Economic Forum in January 2020 and at New Delhi in February, 2020.

Pick up in exports to Saudi

One of the interesting developments on the exports front in recent months is the pick up in the exports to Saudi Arabia from Morbi. Exports to Saudi Arabia accounted for 22% of total exports in the first 10 months of the current financial year. In fact, exports Saudi Arabia have seen an increase of 67% to Rs 1780 crore during the first 10 months over previous year.

Reasons for increased exports

Increased exports are partly due to hoarding by Saudi stockists in anticipation of ADD on Indian tiles over the coming months. Also, it’s a normal trend followed by the stockists to store before Chinese new year holidays as India becomes competitive at this time of the year due to higher freight rates in China. Further, sharp increase in exports in December and January is also preceded by drastic fall in exports in earlier two months. Exports in September and October were significantly down by 53% and 98% YoY impacted by Saudi Arabia government’s changed technical requirements for suppliers of ceramic tiles requiring certification. As the exporters from India received registration certificates towards the end of November, exports started picking up from December. The process of certification took relatively longer time of 1-1.5 months impacting the exports during the interim.

Opening up of US market

Another important development is the opening up of US markets for Indian tile makers. It was also aided by China-US trade war to an extent. In November, the U.S. Commerce Department imposed preliminary duties ranging from 114.49% to 356.02% on Chinese tiles. Imports of ceramic tiles from China into the US were valued at an estimated USD481.3mn in 2018. Exports to the United States from India during the first 10 months have risen at robust rate of 291% YoY year to date to Rs 270 crore partly aided by low base. Still exports US account for hardly 3% of the total exports and there is much scope for improvement.

US market for tiles is too huge and in 2018 US market consumed 288.8mn sqm of tiles out of which 25% was met through imports.  China accounted for 22% of total market, followed by Mexico and Italy at 12% each. While China and Italy are busy battling Coronavirus at home, India at just 1% of market has significant room to gain market share.

India becoming a major exporter of tiles

Even before the outbreak of Coronavirus in China, India was making major inroads into global tiles market in last four years or so. Till 2013, India was 11th largest tiles exporter in the world. A healthy increase in exports in last four year has helped India double its volumes and become the world’s fourth-largest exporter with exports amounting to 24% of its total output. Indeed, the growth was partially aided by market share gains from China in countries and regions where ADD has been imposed on Chinese ceramic tiles. For example, Chinese exports now are facing ADD in EU, Brazil, Taiwan, Chile, Vietnam, and South Korea. As a result, China’s ceramic tiles industry showing declining trend while India’s showing an upward momentum. In 2018, the Chinese ceramic tile industry registered production decline of 11% and exports fell by 5.6%. On the other hand, Indian tile industry registered growth of 6% in production and 20% in exports. Uptrend in exports has been maintained in the current financial year too and the growth is seen not just in exports to US and Saudi alone but also to countries such as the UAE, Kuwait, Thailand and Indonesia. Exports to countries other than US and Saudi Arabia have gone up by 32% to Rs 5,990 crore.

Despite the robust growth in exports in recent months, there is a sword uncertainty hanging in front of our tile exporters. In recent weeks oil price has fallen steeply and Gulf countries’ economies are mainly dependent on oil exports. Any dip in the oil revenue of those countries will have adverse impact on their domestic economies eventually leading to reduced imports including that of tiles.  Further, Coronavirus may have disruptive impact on the world growth which too may impact the future growth (in near term) of the tiles industry. On the domestic front, demand is not picking up due to slowdown in real estate industry which refuses to wake up from slumber. Thus, the industry may have to live with these uncertainties in the coming months.

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