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CERAMIC·BATHROOM April 18-21,2018

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Brief Look into Indian Ceramic Tiles Industry

Time:2017.12.04  Views:


During the last two decades, the Indian Ceramic Tile Industry has recorded a phenomenal growth in product profile, geographical spread and value-added products. Largely dominated by family-owned and managed units, it was the world’s third largest manufacturer of ceramic tiles after China and Brazil. India is also the third largest consumer of tiles in the world, accounting for about 6.25% of global ceramic tile consumption.

 1.Overview of the Industry

Ceramic Tiles today have become an integral part of home improvement. It can make a huge difference to the way your interiors and outdoors look and express. The main product segments in India are the Wall tile, Floor tile, Vitrified tile and Industrial tile segments and their market shares (in value terms) are respectively 20%, 23% 50%, and 7%. The Indian tile industry, despite an overall slowdown of the economy continues to grow at a healthy 15% per annum. Ceramic tiles as a product segment has grown to a sizeable chunk today at approximately 680 Millions Square meters production per annum. However, the potential seems to be great, particularly as the housing sector, retail, IT & BPO sectors have been witnessing an unprecedented boom in recent times. 


The industry also enjoys the unique distinction of being highly indigenous with an abundance of raw materials, technical skills, infrastructural facilities despite being fairly capital intensive. A total of over 5,50,000 people are employed in the sector. Out of this, 50,000 people are directly employed and 5,00,000 are indirectly associated. The potential is huge considering the per capita consumption of ceramic tiles in India. Despite slowdown in the real estate sector and adverse macroeconomic environment, low per capita consumption of tiles in India, rapid urbanisation, increasing disposable income of nuclear families and untapped rural market and stable replacement demand is envisaged to augur well for this industry. Despite increase in consumption, per capita consumption of ceramic tiles in India is only 0.59 square metres (SQM). India lags behind Brazil, China and Vietnam, which exhibits an exponential growth potential for ceramic industry in conjunction with demographic and rising urban population in India.



2.Rapid Growth in Ceramic Tiles Exportation

The last three years have seen unprecedented capacity additions ion India ceramic tile industry for a number of reasons. At the end of March 2017, India’s total installed capacity stood at 940 million square meters, placing it ahead of Brazil as the second largest country in terms of installed capacity. Huge addition in installed and production capacity and slowdown in country’s real estate promoted a number of ceramic tile producers to look to overseas markets.

As a result volume of the ceramic tile exports from the country have jumped by about 200% in a span of three years. In terms of value, the exports have seen an increase of 67% in last three years. As can be seen in the tables, it is suggested that ceramic tile exports gained momentum in the year 2014, when exports registered a growth of 64% as compared to 2013, Post 2014, Indian exports have registered huge gains.


Ceramic tile production and exports from India

Year

Exports

Production

Exports as % of Domestic Production

2016

158

871

18.14%

2015

127

846

15.01%

2014

94

817

11.50%

2013

57

743

7.67%

2012

36

697

5.16%

2011

32

623

5.13%

 

Opportunities in the Middle East market-particularly in Saudi Arabia (Saudi Arabia has imported about 180 million square meters of ceramic tiles in 2016) in recent years have resulted in the explosive growth in ceramic tile exports from the country. A few years back, the Middle East and some of the African countries were the prime targets for Indian ceramic tile producers. But, in last three years, Indian producers and tile traders have started to penetrate the CIS, European and South American Markets.

 

3.Trading Company & Single Brand Initiative

 

The export gained momentum in last three-four years when Morbi/Gujarat based producers started to export in large numbers. Prior to 2013, most of the exports took place by organized sector producers, as Gujarat based producers didn’t have wherewithal to export ceramic tiles. But, with a number of these producers achieving scale and scope and export houses joining the fray, exports started to climb steeply. Small scale of a number of tile producing units in Morbi, lack of exports know-how and limited marketing capacities have led to flourishing of a number of export houses and tile traders in India. These traders buy ceramic tiles from medium and small tile producing companies and export to a number of countries.

 

In a move unprecedented in India’s ceramic industry, ceramic exports from Morbi are working on a plan to launch a single common brand for exports. If implemented the producers will soon come up with a common brand that will follow standardized quality parameters. This will not only eliminate competition among local players to grab overseas orders, which forces them to compromise on margins, but also enable them to improve quality and fetch better margins. Such a move would prove challenging to new range of traders that have emerged as they each seek to essentially try and sell the same product. Currently, a number of smaller tile producers are unable to fetch premium as well as volumes in overseas markets. Quality control, too, becomes a problem, which eventually hurts individual brands, putting at stake the reputation Morbi has been trying to build at the global level.

 

4.Good Momentum in the Future

 

Driven by introduction of value-added products in the urban areas and increasing penetration of ceramic tile as a preferred option in rural areas, rising awareness towards personal hygiene along with massive schemes launched by the Government of India, the ICTI has the potential to maintain positive growth in the medium term. India’s domestic consumer market, increase in working-age population and urbanisation is envisaged to augur well for the aesthetically and technically superior high-end ceramic tiles in the urban segment than in the past. However, as the high growth rates have brought in significant new capacities and the organised market is getting immensely competitive, manufacturers need to focus on creating a strong brand-recall through investment in marketing and branding and setting up a wide-spread distributor and dealer network to reach out to a customer base.

 

Edited from Asian Ceramics, Care Ratings, ICCTAS

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