SHEEN AMIDST

India's ceramics industry while showing strong growth potential faces headwinds in the form of volatile demand, rising costs, and policy hurdles. What needs to be done? By ASHISH SINHA

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INDIA’S CERAMIC industry, valued at approximately Rs 60,000 crore, is poised for strong expansion, supported by a robust export market contributing around 35 per cent of total revenues. Enjoying a higher compound annual growth rate (CAGR) than the global average of 2.7per cent, India’s ceramic sector stands out for its dynamic growth potential. However, the industry is grappling with short- to mid-term challenges, including volatile demand, rising input costs, and policy hurdles.

The domestic tile industry saw negative growth in FY 2024 due to sluggish market conditions. While the current fiscal year shows signs of stability, demand remains tepid, with expectations of flat to low single-digit growth. Key concerns include rising natural gas prices—one of the most critical input costs—further exacerbated by the fuel’s exclusion from the GST framework. The lack of input tax credit adds nearly 20 per cent to production costs, significantly reducing the industry's global competitiveness. Economic headwinds also pose challenges. India’s GDP growth slowed to 5.4 per cent in Q2 FY25, marking a seven-quarter low, largely due to weakened urban consumption. However, the government's Rs 11.21 trillion infrastructure push for roads, railways, and urban planning is expected to drive long-term housing sector demand, which, in turn, will benefit the tile industry.

Additionally, rising raw material costs, particularly clay and silica, as well as energy prices are squeezing margins, leading to price recalibrations. Inflationary pressures have impacted both domestic and export pricing strategies, yet the industry is responding with technological advancements and efficiency-driven innovations to sustain its growth momentum.