Morbi’s ceramic industry, one of Gujarat’s major manufacturing and export hubs, is facing a severe slowdown as a combination of natural gas shortages, sharply higher fuel prices, rising freight costs and container shortages continues to hurt manufacturers.
The impact is clearly visible in the industry’s export figures. Ceramic exports from Morbi fell by around 70% in the first quarter of the 2026-27 financial year, compared with the same period a year earlier.
Exports that stood at around $616.78 million between April and June 2025 dropped to just $184.19 million during April-June 2026, representing a decline of 70.1%.
In rupee terms, exports worth around Rs 5,200 crore in April-June 2025 fell to approximately Rs 1,700 crore in the corresponding period of 2026.
Gas Crisis Puts Ceramic Production Under Pressure
The latest crisis was largely triggered by factors outside the industry’s direct control.
The ceramic sector had been performing relatively well until the end of the last financial year. However, the conflict involving Iran and Israel and the subsequent disruption around the Strait of Hormuz created uncertainty in the supply of natural gas and propane.
This severely affected Morbi’s ceramic manufacturers because gas is a major part of their production costs.
Gas accounts for nearly 40% of the total cost of producing ceramic tiles. The industry is also heavily dependent on propane.
Around 900 ceramic units in Morbi consume nearly 55 lakh SCM of propane every day, along with another 25-30 lakh SCM of piped natural gas supplied by Gujarat Gas.
Gas Prices Nearly Doubled
Before the West Asia crisis intensified, the average gas price for Morbi’s ceramic industry was around Rs 48 per SCM.
As the crisis grew, gas supplies to the industry were disrupted. Several units were forced to suspend production for nearly 30 to 45 days, as gas supplies were prioritised for domestic consumption.
With uncertainty over supplies, manufacturers had to look for alternative sources.
Gujarat Gas managed to arrange supplies from alternative sources and the spot market. However, this pushed prices as high as Rs 90 per SCM at one point.
Later, the price of PNG supplied by Gujarat Gas stabilised at around Rs 79 per SCM, with the company supplying approximately 85 lakh SCM of gas to industries.
Propane Supply Also Became Uncertain
The situation was complicated further because many ceramic manufacturers had already committed to propane supplies.
As August approached, companies that had promised to supply propane informed manufacturers that they were unable to procure the required quantities because of the changing situation in West Asia.
Gujarat Gas consequently had to purchase additional gas from the spot market at the last moment.
The company agreed to supply gas at around Rs 89 per SCM to consumers who had not submitted their requirements earlier. Those who had submitted their demand in advance were able to obtain gas at around Rs 79 per SCM.
Propane suppliers, meanwhile, offered gas at around Rs 85 per SCM. Since propane has a higher calorific value, some manufacturers still considered it relatively cheaper than natural gas when the actual consumption was taken into account.
Production Could Not Fully Recover
The uncertainty surrounding fuel availability and the prolonged production shutdowns had a major impact on exports.
When production resumed after a gap of nearly a month, Morbi’s ceramic industry initially saw strong demand from the domestic market because of the shortage of tiles.
However, the same products struggled to find sufficient buyers in international markets.
The industry was facing several problems at the same time. Higher gas prices increased production costs, while freight rates rose sharply and containers became difficult to obtain.
Freight Costs Surge 200-300%
The increase in shipping costs has added another major burden for exporters.
According to industry representatives, freight rates to the UAE, which were earlier around US$300-400 per container, have recently increased to as much as US$2,500.
Such a steep increase makes it much more difficult for Morbi manufacturers to remain competitive in overseas markets.
Industry representatives said domestic buyers were willing to accept higher prices, but Morbi’s ceramic manufacturers faced intense competition from China and European ceramic-producing countries in international markets.
Exports Fall Across Major Markets
The export decline was not limited to one or two countries. Morbi’s shipments fell sharply across several major international markets.
The impact of the crisis was visible across several of Morbi’s major export markets during April-June 2026. Exports to the United States fell from $53.28 million in April-June 2025 to $16.04 million, a decline of 69.9%.
The biggest fall was recorded in Iraq, where exports plunged from $26.67 million to just $0.47 million, marking a massive 98.2% decline. Exports to Oman also dropped sharply, falling from $19.92 million to $1.17 million, a decline of 94.1%.
Shipments to Saudi Arabia fell by 92.6%, from $11.21 million to $0.90 million, while exports to the UAE declined 86.5%, dropping from $40.87 million to $5.52 million.
Morbi also recorded a significant decline in exports to Russia, where shipments fell from $93.01 million to $15.34 million, an 83% drop. Exports to Israel decreased by 78.9%, from $19.62 million to $4.41 million.
Other major markets also saw substantial declines. Exports to the United Kingdom fell 59.2%, from $31.20 million to $12.73 million, while shipments to Poland dropped 50.8%, from $21.33 million to $10.48 million. Exports to Vietnam declined 52.6%, falling from $17.56 million to $8.33 million.
The sharpest fall was recorded in Iraq, where exports dropped by 98.2%, followed by Oman at 94.1% and Saudi Arabia at 92.6%.
Exports to the UAE fell by 86.5%, while shipments to Russia declined by 83%.
Overall, the figures show that Morbi’s export slowdown was spread across nearly all its major international markets, with the steepest losses seen in the Middle East and other key overseas destinations.
Qatar Supply Disruption Added to the Problem
Qatar is a major supplier of LNG to India, and disruption to shipping through the region severely affected gas availability.
With the reopening of the Strait of Hormuz and hopes of improved availability, propane suppliers again approached Morbi’s ceramic manufacturers in July.
They offered supplies at prices lower than PNG, providing some relief to manufacturers struggling with high fuel costs.
However, the industry still faces uncertainty over future gas supplies.
Gujarat Gas has asked industrial consumers to provide advance estimates of their requirements for the following month. For example, when the company sought demand estimates around July 20 for August, most ceramic manufacturers did not submit their requirements because they had already entered into agreements with propane suppliers.
Container Shortage Adds to Export Troubles
The problems facing Morbi are not limited to energy.
A shortage of shipping containers has made exports even more difficult. The combination of high gas prices, expensive freight, limited container availability and anti-dumping measures has weakened the industry’s position in key international markets.
Several Gulf nations, European countries and South Africa have imposed anti-dumping duties on Indian ceramic products, with rates ranging from 50% to 100%.
This has made it even harder for Morbi manufacturers to compete with producers from other countries.
Morbi Faces a Difficult Road Ahead
Morbi’s ceramic industry now finds itself caught between rising production costs at home and tougher competition abroad.
While the domestic market has shown stronger demand, exporters are struggling to sell their products internationally at competitive prices.
The industry is hoping that improved gas availability, lower fuel prices, normal shipping through the region and easing freight costs will help exports recover.
For now, however, the combination of the gas crisis, 200-300% rise in freight rates, container shortages and anti-dumping duties continues to put serious pressure on Morbi’s ceramic export business.
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