India’s $7 billion ceramics and tiles industry risks grinding to a halt as the escalating Middle East conflict crimps fuel supplies, threatening the livelihoods of hundreds of thousands.
The US and Israel’s war on Iran has disrupted fuel shipments from the Middle East, hitting an industry that relies on propane and natural gas to fire its kilns.
Morbi is one of the world’s largest ceramic manufacturing clusters and the backbone of India’s tile industry. Many of the cluster’s roughly 800 ceramic units, which produce tiles, sanitary ware, and other products, have been hit by fuel supply cuts and a pause in exports to the Middle East, the officials told Reuters.
Call for a collective shutdown
Several manufacturers that were using propane have already shut down or are close to shutting down operations due to shortages, while arranging on-site food and lodging to retain workers during the stoppage, the report said.
Some companies that depend on natural gas have begun receiving force majeure notices from suppliers, forcing them to suspend production.
“Restarting production without certainty of fuel availability is economically unviable,” Hitesh Detroja, chief of Lexus Granito, told Reuters. “The present situation could possibly be worse than the COVID-19 period for the industry.”
Tiles and bathware maker Asian Granito said in a filing on Friday that it was evaluating alternative fuels and operational measures to soften the impact.
“If the fuel supply situation does not improve, all ceramic units in Morbi will observe a collective shutdown after March 15,” said Manoj Arvadiya, president of the Morbi Ceramic Association.
Exports come to a halt
The industry is also unable to ship finished goods to the Middle East, which normally accounts for about a quarter of Morbi’s 30,000 monthly export containers.
“These shipments have come to a complete halt,” said Niraj Kundariya, chief of global sales at Win-Tel Ceramics.
Shipping companies have also hiked freight charges by 20–30 times, making exports unviable, he added.
The industry has also urged the Gujarat state government to allow coal gasifiers, which convert coal into gas used as industrial fuel, as an alternative. Authorities banned them in Morbi in 2019 to curb air pollution.