Morbi Ceramic Exports Crash 70% in Q1: Inside India's Tile Capital's Worst Crisis Yet

By Manish Mendpara | Morbi, Gujarat | Last updated: 11 August 2026

This is a live tracker on Morbi's ongoing tile export crisis — updated as new trade data, gas-price changes, and policy developments come in. Here's exactly what's changed since this article first went live.

Update log (this page will keep changing)

If you're reading this for the first time, skip straight to the numbers below — the update log is just here so returning readers can see what's new without re-reading the whole piece.

Between March and June this year, my phone did not stop ringing. Buyers from Jeddah and Dar es Salaam wanted to know why their container was stuck at Mundra. Transporters were asking if it was even worth sending trucks to Morbi that week. Factory owners I have known for fifteen years were telling me things I never thought I would hear from them — that the kiln, which normally never goes below 1,200°C, was cold.

I run this desk from inside the Morbi trade, not outside it. So this is not a news summary. This is what I saw, heard on WhatsApp, and confirmed against official TradeStat data and industry figures where they exist.

The number that matters most: exports down 70% in Q1

Everything else in this article is context for this one fact. According to official trade figures, Morbi's ceramic exports fell by around 70% in the first quarter of FY 2026-27 compared with the same period a year earlier — from roughly ₹5,200 crore (April–June 2025) to about ₹1,700 crore (April–June 2026). This is the number that finally shows the real damage, because it's the first full quarter that falls entirely inside the crisis window.

Morbi accounts for nearly 90% of India's total ceramic production and more than 85% of the country's ceramic exports — so a hit of this size to one industrial town is effectively a hit to India's entire tile export sector.

How big is this business, actually

If you're not from here, it's easy to underestimate what Morbi does. This one town supplies 80–90% of India's ceramic tiles and sends containers to over 130 countries every month. It is the second-largest ceramic cluster on the planet, after China's Foshan belt.

The cluster turns over somewhere between ₹50,000 and ₹75,000 crore a year. Exports alone were worth ₹15,000–20,000 crore before the crisis. Depending on who is counting — the Morbi Ceramic Association counts differently from smaller factory owners' groups — there are anywhere from 650 major units to over 1,000 including smaller lines.

Before this year, our biggest buyers were the USA, UK, UAE, Russia, and Vietnam, in roughly that order.

The export numbers, straight from TradeStat

Here's where you have to be careful, because the annual figure lies to you if you don't look closer.

That "+3.75%" for FY 2025-26 looks fine until you check the calendar. The war started on 28 February 2026, right at the tail end of that fiscal year — so the figure is eleven decent months plus one terrible one, averaged to look healthy. The Q1 FY26-27 number above is the real story: the first quarter that sits entirely inside the crisis, and it shows a 70% collapse. Anyone quoting you the FY25-26 annual number as proof things are okay either hasn't checked the dates or is trying to sell you something.

One more thing worth flagging: sanitaryware (HSN 6910 — basins, WCs, sinks) did not follow tiles down. It grew 13.08% in FY 2025-26, hitting ₹1,570.59 crore. Same cluster, same gas crisis, different result — likely because sanitaryware kilns run smaller batches and their export markets are less tied to the Gulf route. Worth watching if you trade in that segment.

We were already slipping before the war

This is the part most reports skip, and it matters for anyone trying to understand what's next. Mundra Port shipment data for HSN 6907 shows exports were cooling a full month before the first missile was fired.

Buyer mix shifted too. In December, USA was our top destination by value. By January, UAE had jumped to the top spot with a sharp spike, USA had slipped, and — this one raised eyebrows in our trade group — Israel appeared as a new top-five buyer, right before the war that would eventually hit that very corridor.

Sanitaryware, again, barely moved: 3,496 shipments in December versus 3,471 in January. Whatever was cooling the tile trade wasn't touching sanitaryware. So no, the war did not cause the slowdown on its own — it hit a market that was already losing steam and turned a soft patch into a full stop.

What actually shut the kilns down: the gas math, in real numbers

On 28 February 2026, the US and Israel struck Iran. Iran's response was to threaten and partially block the Strait of Hormuz — the shipping lane carrying roughly half of India's crude and gas imports and about a fifth of the world's oil. Qatar, a major LNG supplier to India, saw its shipping through the region severely disrupted, which hit availability hard on our end.

Here's the scale nobody usually puts in numbers: around 900 ceramic units in Morbi were consuming nearly 55 lakh SCM of propane a day, on top of another 25–30 lakh SCM of piped natural gas supplied daily by Gujarat Gas. Gas — propane and PNG combined — accounts for nearly 40% of the total production cost of a ceramic tile. When that fuel base disappears overnight, there is no cushion.

Propane wasn't just more available before the crisis — industry representatives say it was actually cheaper than piped natural gas and carries a calorific value around 17% higher, meaning it delivers more usable heat per unit than the same volume of PNG. That's why nearly 70% of Morbi's factories had built their operations around it.

Before the crisis escalated, the average gas price for Morbi's ceramic industry was around ₹48 per SCM. As Hormuz disruptions intensified, several units were forced to suspend production for nearly 30 to 45 days, as the government prioritised gas supply for households over industry.

A tile kiln running at 1,200°C is not something you switch off for the weekend. Cooling it down wrong can crack the refractory lining and put the whole unit out for months, not days. Factory owners here were choosing between running at a loss on whatever gas they could get, or risking permanent damage to a kiln worth crores. One factory owner put it plainly during a Morbi Ceramic Association meeting in March:

"If the main raw material is disturbed, the whole industry is disturbed." — Kishor Dulera

How it unfolded, week by week

By late June, 60–65% of units were running again. Some association estimates put the shutdown peak higher — 550, even 620 units, once smaller and unregistered lines are counted. On the ground, I'd trust the 450-of-650 figure for major units, since that's the one I watched happen in real time. But whichever number you use, more than two-thirds of Morbi went quiet at the worst point — something that didn't happen here during COVID or demonetisation.

Roughly 1,500 loaded containers sat stranded at ports during the worst weeks, and something like ₹400–500 crore in shipments was frozen mid-route.

What it's costing everyone, in rupees

CRISIL projects a 6–7% fall in export revenue for the year; ICRA puts export volume down 5–10% — both estimates now look conservative next to the actual 70% Q1 collapse. Industry-wide operating margins are expected to drop to a five-year low around 9.3–9.5%, falling further to 8.2–8.5% next year. For MSME units — over 85% of the cluster's revenue — margins could shrink to just 4–6%.

April was the worst single month: exports down 41% year-on-year, per Canara Bank's trade data. Even in June, after restart, sales were still down 18% month-on-month.

July–August: gas supply came back, but so did the uncertainty

This is the part of the story that's still unfolding, and it shows the crisis isn't just about gas volume — it's about planning risk.

With the Strait of Hormuz reopening in July and hopes of improved availability, propane suppliers went back to Morbi's manufacturers offering supplies cheaper than PNG. Since Gujarat Gas requires industrial consumers to submit advance demand estimates for the following month, when it asked for August nominations around 20 July, a majority of manufacturers didn't place their PNG requirement — they'd already committed to propane instead.

As August approached, the propane suppliers came back and said they couldn't actually source the gas they'd promised, because of the still-shifting West Asia situation. Gujarat Gas was forced into last-minute spot-market buying. The result was a two-tier price: manufacturers who had submitted advance PNG nominations got gas at around ₹79/scm, while those who hadn't were charged closer to ₹89/scm. Propane suppliers, meanwhile, were quoting around ₹85/scm — but because of its higher calorific value, manufacturers still consider propane the relatively cheaper option on an effective, per-unit-of-heat basis.

This episode matters more than the price gap itself: it shows Morbi's fuel supply chain still has no reliable backup plan. Even with the war "over," a single sourcing miscalculation nearly triggered another mini-shutdown.

Why exports specifically didn't recover, even after gas did

When production resumed after roughly a month-long gap, Morbi initially saw strong domestic demand — the tile shortage meant local buyers absorbed excess stock, even at higher prices. Exports were a different story. As one leading exporter, Manoj Unghrejiya, put it: high gas costs forced price increases, freight rates rose 200–300%, and there was also a shortage of containers — a combination domestic buyers tolerated but international buyers didn't.

That's the real reason the export line didn't bounce back with the domestic one: Morbi's international customers had cheaper, faster alternatives, and price-sensitive Gulf and African buyers simply switched.

The competition problem: China, Europe, and anti-dumping duties

With higher gas and freight costs stacked on top of container shortages, Morbi's ceramic industry is finding it increasingly difficult to compete with China and major European ceramic-producing countries in international markets.

On top of that, several Gulf nations, European countries, and South Africa have imposed anti-dumping duties on Indian ceramic products, with rates ranging from 50% to 100% — with Saudi Arabia, Qatar, and Taiwan specifically cited at the higher end of 50–106% on Indian tiles. Chinese manufacturers, meanwhile, have been quietly setting up local plants in Nepal, Kenya, Jordan, and Saudi Arabia — cutting themselves out of the ocean-freight chaos that just hit Morbi so hard. That's a real structural edge, war or no war.

What it did to people

The livelihood numbers vary by source, and I want to be honest instead of picking whichever sounds most dramatic. The most detailed estimate puts total dependent livelihoods — direct and indirect — at around 9 lakh, with roughly 4 lakh people directly employed in factories, most of them migrants from Bihar, UP, Odisha, and Jharkhand. At the peak, over a lakh lost their income overnight; those who kept jobs mostly took 50% pay cuts.

A worker named Radhe, from Bihar, told a reporter in March:

"We have been told there will be no work for us after 15 March. If we don't get our salary, we will have to go back home; there is no other option."

Whole families left. You could feel it in the town — quieter chai stalls, fewer bikes near the industrial estates in April. It didn't stop at factory workers: the 53 kraft paper mills that make tile packaging saw sales drop up to 50%, and truck traffic bringing raw material in from Rajasthan fell by 90%.

It's not just Morbi, and it's not just this war

A shipping industry report from early August — WeSpeak Shipping, on Indian exporters to West Africa — describes almost the exact complaints heard in Morbi's own transporter groups every week: freight rates climbing without warning, empty containers arriving damaged after 24–36 hour depot waits, shipping lines not disclosing vessel delays until after the container is already loaded and gone.

Their question to the government was blunt: how long can exporters keep absorbing the cost of a system they don't control? The war made things worse, but it didn't invent the problem — the cracks in India's export logistics were already there.

Update: now Washington is adding a tariff threat on top of all this

Just as gas prices were settling and factories were getting labour back, a new problem landed from a completely different direction. On 6–7 August, the US Senate passed the Lindsey Graham sanctions bill by an 86-11 vote, giving the US President power to impose tariffs of up to 100% on the top five countries still buying Russian oil and gas — India is named directly, alongside China.

Right now this is a threat, not a fact on the ground. India's actual position today is a temporary 10–12.5% duty under the current US trade arrangement, with negotiators working on a longer-term bilateral deal. But the USA is one of Morbi's top three buyers — if this bill widens in scope the way such bills often do once written into policy, an American buyer could be looking at a completely different cost equation on top of the fuel, freight, and anti-dumping pressures already stacked on this trade.

Nobody can say today whether tiles specifically get hit, whether it stays limited to oil-linked measures, or whether trade-deal talks defuse it first. Don't lock in a big US-bound order right now assuming today's 10–12.5% rate holds for six months.

Which sizes got hit hardest

This part you won't find in any official report, because it comes from watching which factories restarted first. The bigger the slab, the harder the restart. Large-format porcelain — 800x2400mm, 1200x3200mm, 1600x3200mm lines — needs longer, steadier firing cycles and a kiln that's harder to bring back safely after a cold shutdown. Those units were slower to restart than standard 600x600mm and 600x1200mm lines. Full-body vitrified and GVT lines that depend heavily on continuous gas also took longer to stabilise than glazed lines running on a more flexible fuel mix.

If you're a buyer sitting on a large-format order right now, ask the factory directly whether their kiln for that size is back to full temperature — "operational" and "full temperature" are two different things here.

Where things actually stand right now

Gas started stabilising from mid-April, once Gujarat Gas began sourcing LNG from outside the Middle East. By May–June, most of Morbi's roughly 750 registered units were back — 725+ on natural gas, a smaller number on propane. Capacity is expected to climb toward 85%, but labour is now the bottleneck, not gas — many workers who went home in March haven't fully returned.

Factories leaned hard on the domestic real estate boom, pulling in an extra ₹1,000 crore a month in domestic sales. A "100% advance payment" rule is now standard for new and custom export orders.

What buyers, architects, and traders should actually do right now

• Ask for the factory's current operational status in writing, not verbally — "we're running" can mean 40% or full capacity.
• Expect the 100% advance payment rule on new orders; it's cluster-wide now, not supplier-specific.
• Build in 3–10 extra days on quoted lead times, especially for large-format sizes, until labour fully returns.
• Factor in current freight rates (still 6–8x normal to some routes) and GST before comparing any quote to pre-2026 pricing — the base cost structure has genuinely shifted.
• If quoted a China price, ask whether it includes anti-dumping duty for your destination market — that single line item changes the comparison.
• Don't assume falling export demand means falling prices — factory-gate prices are up 30–50% since the crisis started, driven by fuel and freight, not weak demand.
• If shipping to the USA, don't sign a fixed-cost long contract right now without a tariff clause.

What's next

The Q1 FY26-27 numbers confirm what the annual FY25-26 figure hid: this is Morbi's worst export crisis on record, worse than COVID or demonetisation in terms of the export line specifically. Listed players like Kajaria, Somany, and Asian Granito are likely looking at margin pressure for another couple of quarters at least. The industry is asking the government for a GST cut from 18% to 5% on ceramics and more transparency from shipping lines. Add the US trade deal timeline to that watchlist too — whatever gets signed there will matter as much to USA-bound exporters as the gas price did in March.

Morbi has been through demonetisation, COVID, and fuel spikes before, and came back each time. This one exposed something specific: how much this entire cluster depends on one shipping lane, one fuel source, and now, possibly, one market's tariff mood. The factories that use this year to diversify fuel sourcing and open new markets — Latin America, deeper Africa, wherever isn't sitting behind Hormuz or a Washington vote — are the ones that won't be caught like this again.

The kilns are running. That much I can tell you from having walked past them myself.