The Union budget for 2018-19 should focus on making the Rs 32,200-crore strong ceramic industry more competitive by extending more financial incentives, say local players. Morbi in Gujarat contributes close to 90 per cent of the national production.
In a recent submission to the Parliamentary Standing Committee on Commerce, Morbi Ceramic Association said Morbi is among the 36 Towns of Export Excellence (TEE) as ceramic exports from the city is over Rs 500 crore and so export incentives should be raised from 2.75 per cent to 5 per cent. China provides 9 per cent export subsidy, which puts local industry at a disadvantage. It also suggested that efforts should be made to improve infrastructure at all the industrial clusters of the country to improve overall business efficiency.
Players said certain aspects are increasing the cost of production of ceramic products raising the burden on the end users. These include high prices of natural gas, which constitutes 30% of the input cost in the sector.
Moreover, considering the fact that most ceramic products are used by the masses, the Goods and Services Tax (GST) should be reduced from 18 per cent to 12 per cent.
In the memorandum submitted, Morbi Ceramic Association said that logistics is one of the key bottlenecks for the sector and therefore needs to be addressed. Association president KG Kundariya told DNA that the government should enable transport of goods through the sea route to reduce transport cost, save fuel as well as reduce traffic on the highways.
The association demanded that the price of natural gas, used as a fuel in the sector, should be controlled as it constitutes 30 per cent of the total input cost of the manufacturers. The association also suggested that India should stop exporting natural resources, instead do value addition within the country to get multiple returns, create more jobs and generate more revenue.
SECTOR SNAPSHOT
National production in volume: 2,200 million sq mtr /Rs 32,200 crore
Gujarat's production in volume: 2,000 million sq mtr/Rs 29,000 crore.
Number of units in India: about 800.
Number of units in Gujarat: 740
Morbi's share in national production: 90%
Ceramic tiles exports of India: about Rs11,000 crore (expected in FY 2018)
Ceramic tiles exports of Morbi: Rs 10,000 crore (expected in FY 2018)
Job provided: 10,00,000 (4,00,000 direct in factories and 6,00,6000 auxiliary business)
New investment/under pipeline: FY 2018 Rs. 7,000 crore (Rs. 8,250 crore started commercial production)
QUOTE:
Ceramic products are mostly consumed the by the masses so the tax burden should be lower. High tax, high fuel price and high logistics costs are increasing the burden on the end-users. Lower input cost will improve the competitiveness of local players in domestic as well as export markets. Transport of goods within the country is extremely costly and steps should be made to reduce this cost.
KG Kundariya, president, Morbi Ceramics Association – Vitrified Tiles Association
MAJOR DEMANDS
- Increase Town of Export Excellence incentive from 2.75% to 5% to encourage exports
- Stop exporting natural resources, instead do value addition within the country
- Reduce GST from 18% to 12%
- Develop infrastructure at industrial clusters
- Encourage transport of goods within the country through sea route to reduce cost
- Increase interest discount of banks from 1% to 2%.
- Control price hike of gas used as a fuel, it constitutes 30% of total input cost
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