Morbi-based ceramic units are already finding it difficult to fulfil their export orders taken before the NGT's mandate.
Exports from one of the world’s largest ceramic clusters at Morbi in Gujarat may be crippled in the wake of recent order of the National Green Tribunal (NGT) to convert ceramic units that run on coal gasifiers to natural gas.
Morbi-based ceramic units are already finding it difficult to fulfil their export orders taken before the NGT’s mandate as the production cost of most of the units has gone up by at least 10% as compared to traditional coal gasifiers-based system.
“The price of natural gas is ranging from Rs 30-Rs 35 per cubic meter, which is almost 40% -50% higher than coal gasifiers. In such situation, most of the units which have already taken export orders would incur huge loss in servicing the orders,” said Nilesh Jetparia, president of Morbi Ceramic Industry Association, adding if the prices of natural gas do not go down, it will be difficult for the domestic industry to compete with their Chinese counterparts in price-war.
According to Jetparia, owners of ceramic units have made representations to the Gujarat government as well as the central government to ensure reduction of natural gas prices by at least `5 to provide a level playing field to local ceramic industry in international market.
Currently, Morbi ceramic clusters’ annual turnover stands at nearly Rs 40,000 crore that include Rs 10,000-crore exports across the world. Of 900-odd ceramic units, hardly 100 had taken natural gas connections and several others are in the process to convert from coal gasifiers to natural gas after the NGT’s mandate.
“We were not knowing about the sudden change in fuel prices at the time of taking export orders. Currently, our two ceramic units which were recently converted to natural gas would function at loss for the next one and half months to fulfil export commitments,” said the owner of a ceramic unit, which exports ceramic products in nearly 20 countries.
“Most of our overseas clients are buying products for over a decade, but I don’t know whether they would continue to buy from us with increase rates. International market is highly price-sensitive and hence, we need to balance between quality and price to counter Chinese products.”