Tiles form the most significant part of Indian ceramics industry and consists of floor, vitrified, porcelain, wall and industrial tiles. Overall size of Indian ceramic tile industry is estimated to be approximately Rs 18,000 crore. Morbi, a town in Gujarat is known as the heart of the Indian ceramic industry as the cluster commands about 70 per cent of the production of these ceramic products.
"The structure of Indian ceramics industry is highly fragmented with very few large players and a large number of small and medium enterprises (SMEs)," noted the analysis carried out by the Assocham Economic Research Bureau (AERB).
"China is producing far more than its existing consumption level of ceramics evidently as of about 5,200 million squares metre (Sq. m. mill.) of ceramic tiles produced in 2012, China consumed about 4,250 Sq. m. mill. and therefore China, invariably has to look for export markets to sell its surplus production, India also is one such market which is flooded by Chinese imports," said D.S. Rawat, national secretary general of Assocham.
"Besides, domestic ceramic products' manufacturers are not able to pass on the rise in input costs to consumers due to emerging competition from countries like China which adversely impacts their profitability," said Mr Rawat. "Therefore, there is an urgent need to look into the possible roadblocks and come up with a timely response so that the industry can work on full throttle towards its true potential."
Apart from China, the countries of Germany, Italy, France and Austria are amid top five exporters of ceramic products into India with a share ranging between eight per cent to two per cent.
India exported ceramic products worth over a total of $435 mn as of 2012 which is way below the total imports of over $734 mn, however, there is a slight ray of hope in favour of Indian ceramics industry considering that growth of exports outpaced the import rate by a margin of about six per cent notably as India’s imports of ceramics grew at a CAGR of about 13 per cent during the course of past six years (2007-12) while exports grew at about 19 per cent, highlighted the Assocham analysis.
However, close analysis of India's trade position in terms of ceramics products’ imports and exports showcased a trade deficit which has grown significantly by about 41 per cent since 2007 till 2012 i.e. from over $212 mn to about $300 mn, further noted the analysis. "Such wide differences between import and export values do not augur well for growth of domestic ceramics industry in the long run."
With a share of over eight per cent, Saudi Arabia is the leading importer of Indian ceramic products clocking a CAGR of about 27 per cent. While with a share of about eight per cent, UAE (United Arab Emirates) is the second leading importer of India's ceramics followed by Turkey (5.2 per cent), USA (4.9 per cent) and Nepal (4.1 per cent). UK, Iran, Sri Lanka, Germany and Kenya are other countries figuring amid top ten importers of Indian ceramics products.
However, in terms of growth, Nepal has clocked the highest growth rate of about 60 per cent in imports of Indian ceramic products followed by Iran (41 per cent), Turkey (32 per cent), Saudi Arabia (27 per cent) and USA (19 per cent), further noted the Assocham analysis.
"There is a need for Indian ceramics industry to come up with innovative product lines to help strengthen India’s export performance, in this aspect, advanced ceramics should be looked upon as future growth enabler for ceramics industry," said Mr Rawat.
The rise in cost of raw materials and fuel prices are other major challenges faced by the ceramics industry, besides issues like freight, supply of power and gas remain the key cost-related issues impacting the industry, pointed out the Assocham analysis.
"Anomalies pertaining to duties on import of raw materials from abroad needs to be corrected so that price competitiveness of domestic industry does not get affected," said Mr Rawat.
"To compete internationally, domestic plants need to be scaled up so that they are able to compete against the units that are currently operating in China as it would help them achieve economies of scale and lower the cost of production significantly."
Ensuring availability, consistent supply of raw material alongside their optimal pricing is crucial for the growth and profitability of the ceramic tile industry, he added.