High gas prices close most of India's tile-making units

Calcutta News.Net
Saturday 6th September, 2008 (IANS)

The tile industry in Gujarat's Morbi town, which accounts for about 70 percent of all tiles made in India, is on the verge of collapse due to high fuel prices. About 80 percent of the 200-odd manufacturers have already downed shutters.

The tile kilns are fired by natural gas. The industry is now seeking the state government's immediate intervention to make gas available at reasonable prices.

'About 80 percent of the units remain closed because during the last 18 months the fuel price has gone up by 120 percent,' Gujarat Chamber of Commerce and Industry president Rupesh Shah said.

Energy costs account for 45 percent of the total cost of tile making where the fuel is gas or coal, Shah told IANS. He happens to be a tile manufacturer himself.

Until two years ago, the Morbi tile industry was booming and had a collective turnover of Rs.1 billion ($23.25 million). 'But now, it has become a daily struggle for existence,' Shah said.

The industry has urged the Gujarat government to intervene. 'We hope our representation would be considered and remedial steps would be taken,' Shah said.

'We have impressed upon the government that the domestic price of gas supplied to the industry must have a correlation with global gas prices. Now that oil and gas prices are falling globally, the time is ripe to evolve a suitable formula,' he added.

Fuel costs apart, the industry is also hit by high tax rates, runaway increases in transport costs and increasing imports of cheaper Chinese tiles.

'We have made repeated representations to the central government to impose anti-dumping duty on the Chinese tiles. However, our voice has not been heard so far,' Morbi Dhuva Glaze Tile Manufacturers Association president Veljibhai Patel said.

As alternative fuel, the industry could use lignite from the Panandro mines in Kutch district, but the state government has reserved its use as fuel for thermal power plants.

They can buy lignite from the mines in Bharuch, some 500 km away. But the transport cost of Rs.800 per tonne of lignite makes this prohibitive.

Many workers have been rendered jobless following the shutdown of the units.

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