An employee works at a ceramic tile production line at a factory in Morbi, Gujarat, India, March 5, 2026. | Photo Credit: AMIT DAVE

With over 700 units shut for nearly a month, Morbi—accounting for over 80 per cent of India’s ceramic tile output and anchoring a ₹65,000-crore industry—is seeing a fragile restart, as 250–300 units resume operations only by switching to costly piped natural gas (PNG) after the Iran war disrupted fuel supplies. The sharp rise in energy costs has forced manufacturers to hike ceramic prices by at least 40 per cent, a steep increase that is now beginning to hit demand.

“The factories manufacturing tiles and sanitary wares are beginning to come online. So far about 250-300 units have become functional after the shut down due to gas shortage last month,” Manoj Arvadiya, president of the Morbi Ceramic Association’s vitrified tiles division told businessline.

While supply constraints appear to have eased, pricing remains a major pain point for manufacturers. “We are getting as much gas as we want. But at the current prices, running our units have become non feasible. Our costs have increased after Gujarat Gas increased the prices of PNG from ₹41.5 per scm to ₹73,” Arvadiya added.

Price hike dulls demand

The sharp spike in input costs has forced manufacturers to pass on the burden to customers, resulting in steep price hikes across ceramic products. “Due to the increased costs we have raised our prices by a minimum 40 per cent. In other words, two months ago, the ceramic material that was available at ₹20 per square feet has now risen to ₹28-30. But the dilemma that we are facing now is that at the increased prices, there are no buyers in the market,” he said. Efforts to seek clarity from Gujarat Gas, the largest supplier of PNG to Morbi’s industrial units, did not elicit a response.

The restart follows weeks of disruption triggered by the West Asia conflict, which severely curtailed propane and LNG supplies routed through key global shipping lanes, forcing over 700 units to shut and exposing the sector’s vulnerability to geopolitical shocks. The twin challenge of elevated costs and muted demand is complicating the sector’s recovery trajectory. Industry participants note that even as production resumes, order books remain thin, raising concerns about sustained operations in the coming weeks. Compounding the issue is the continued unavailability of propane, the preferred alternative fuel for many of Morbi’s ceramic manufacturers.

Small players hit hard

The pricing pressure is even more pronounced for smaller players who operate at this ceramic cluster in Gujarat. According to Equirus Securities, smaller companies have taken steeper price hikes of 25–30 percent, mainly to pass on the increase in fuel costs. Hikes are looking steep for smaller players as their selling prices were lower versus branded players before the fuel price started increasing. Most manufacturers believe the price hikes should sustain for at least 3–4 months and will then track LNG/propane price trends, Equirus noted.

On the inventory front, manufacturer-level finished goods stocks have seen a sharp drawdown, aided by strong channel liquidation and end-of-year construction demand. Going ahead, companies are unlikely to rebuild inventories aggressively over the next 3–4 months, given expectations of fuel price normalisation and the risk of holding high-cost stock, it added.

Demand from the secondary channel is currently stable, with April typically being a normal demand month after the March year-end push. The Equirus report also suggests Morbi may see a tighter payment cycle, similar to the post-Covid phase, when stretched credit conditions persisted for 3–4 quarters amid strong demand recovery in both domestic and export markets.

Published on April 18, 2026