When Vaishnavi Nair (name changed) walked into a local tile dealer in Mumbai this week, she was told her kitchen renovation would have to wait. Supplies were delayed, and whatever stock was available cost 5-10% more. “My budget will go for a toss if I buy now,” she said, capturing the early signs of a disruption that has travelled from factory floors to urban homes.
The trigger lies in Morbi, Gujarat, India’s ceramic manufacturing hub, where a fuel shortage linked to the ongoing war in West Asia has forced widespread production cuts. The cluster, which accounts for nearly 90% of the country’s tile and sanitaryware output, is seeing kilns go cold as access to propane gas tightens.
The impact is significant for an industry valued at about Rs 53,000 crore. According to Crisil, Morbi exports nearly 40% of its output to markets including the Gulf, Africa and Europe, and employs over 400,000 people. With supplies disrupted, both domestic availability and export commitments are coming under strain.
Around 420-430 units in the roughly 700-unit Morbi cluster have halted production over the past two weeks, said Mukesh Kundariya, chairman of Segam Tiles and advisor to the Morbi Ceramic Manufacturers Association. These units, forming close to 60% of the cluster, rely on propane gas to fire kilns. Others that use natural gas supplied by a state-run distributor continue to operate, though at varying capacities.
Kundariya said smaller manufacturers are bearing the brunt of the disruption. These units, typically producing 10,000-15,000 boxes of tiles a day, depend heavily on export orders and propane fuel. Larger players, with output of 60,000-80,000 boxes a day, have a more diversified order book and some access to alternative fuel sources.
“We are hoping for the state-run distributor to increase output, but I fear that small players may still be left out,” Kundariya said.
Fuel shortage coincides with disruptions in export logistics
The fuel shortage has coincided with disruptions in export logistics. Shipments to West Asia, which accounts for about 15% of export demand, have been affected due to the blockade at the Strait of Hormuz. This has compounded pressure on manufacturers already dealing with halted production lines.
Crisil estimates that the shutdowns could lead to a 7-8% decline in monthly revenues for March. While existing inventory has cushioned immediate supply gaps, the rating agency said that April and May could see sharper price increases and longer delays if the situation persists.
Mahesh Prajapati, proprietor of Morbi-based ABC Ceramics, said uncertainty over fuel supply and pricing has made operations unviable. “Propane is a cheaper fuel. It is sourced from private firms. Natural gas has one supplier. With the ongoing war, supply remains volatile. Not only do sourcing costs increase, we are also unsure how to price our products,” he said.
Prajapati has shut his unit temporarily after daily losses mounted. The closure has also affected his workforce of 50-60 employees, many of whom have returned to their villages. The slowdown is beginning to reflect the broader employment risks within the cluster.
Similar pattern visible in ceramic hubs across the nation
A similar pattern is visible in other ceramic hubs such as Himatnagar and Gandhinagar in Gujarat, and Jaipur, Alwar, Sikar and Bikaner in Rajasthan, where units dependent on propane have also halted operations.
Ketan Darodiya, proprietor of Utsav Tiles in Himatnagar, expects the shutdown to last until mid-April. “We run a tight ship based on the orders per day we service. A closure for a few weeks hits us hard because most people attached to the business will go without wages,” he said.
Some manufacturers said they had aligned shutdowns with scheduled annual maintenance in March. However, this has provided limited relief as there is little clarity on when fuel supplies will stabilise.
Beyond production losses, companies are also grappling with rising logistics costs. According to Crisil, freight rates have increased by 45-50%, while insurance costs for shipments have risen by 25-30%, adding to overall cost pressures.
For now, the disruption remains contained within inventories and delayed deliveries. But if fuel supplies do not normalise soon, the effects could deepen, pushing up prices further and extending the slowdown from Morbi’s factories to construction sites and households across the country.