600 ceramic units in Morbi to go on indefinite strike from Thursday(Video)

Ahmedabad, 27 November, 2013

·Frequent price hikes in gas prices (130% in last two years), stipulation making use of 80% gas of allocated quota mandatory, ban on use of coal gasifiers, greater incidence of VAT & central excise, removal of anti-dumping duty on Chinese products put a question mark against the survival of the industry

·Daily production loss as a result of shut down pegged at Rs. 35 crore; Loss in government’s tax revenues at Rs. 7 crore, gas supplier’s sales revenue at Rs. 10 crore & electricity companies’ sales revenue at Rs. 2 crore

Around 600 ceramic units, situated in & around Morbi & Wanakner, will come to a halt from Wednesday midnight, as Morbi Dhuva Glazed Tiles Association, the industrial body of the units, has decided to stop production of all units if the government is not going to meet their various demands, which is a must for survival of the industry.

The main demands of the industry, the second largest in the world, include restricted gas supply, rate hike and compulsory consumption clause by GSPC, implementation of guidelines Issued by GPCB to allow use of producer Gas, Revision of VAT structure to match that of substitutes such as Marble, Granite and Revision of Excise Duty for the product in view of commoditization.

In the recent times, the units have started using gas as the feedstock instead of coal, but frequent hikes in natural gas prices is acting as a major damper for the industry and making it difficult for the units to maintain their competitive edge in the domestic as well as global ceramic tiles market. GSPC has hiked gas prices by a whopping 130% in the span of two years, which cannot be tolerated at all. Further, all the price hikes are imposed with immediate effect, which in turn, makes it difficult for the manufacturers to fulfilling existing contractual obligations.

In such a backdrop, in a recent move, GSPC has added a particular clause in the gas supply agreement, which makes consumption of 80% of the total allocated gas quota mandatory. The unit is liable to pay charges for that much amount of gas even if it could not use that much quantity of gas. Such stipulation is no way practical considering the operational peculiarity of the industry and therefore, it is completely unacceptable by ceramic unit owners.

The very recent disproportionate and excessive rate hike of Rs. 4.50/scm is also unacceptable and must be reconsidered and mutually agreed upon. Apart from this, several other topics must be discussed and mutually agreed between the members of the Industry and GSPC for a better understanding and future.

Another recent move – removal of anti – dumping duty on Chinese tiles, has also acted as a mighty blow for the industry and raised a question against the survival of the industry. In a fight for survival, industrialists have switched over to the well-adopted technology of using producer gas to fire their kilns and maintain cost effectiveness. However, in view of a recent high court ruling, GPCB (Gujarat Pollution Control Board) insisted on shutting down of these coal-gasifiers, thereby further threatening the survival of these Industries.

Acting as the sole lifeline for the survival of the Ceramic Industry, the use of coal gasification should be permitted by concerned government authorities in background of strong and effective environmental regulations that help sustain the environment and ensure that any pollution from the use of such gasifiers must be curtailed. In view of the same, the industry demands to allow the use of coal gasifiers that meet the guidelines already provided by the GPCB.

The complicated and excessive tax structure on ceramic tiles as compared to substitutes further adds to the woes of the Industry and must be carefully restructured to ensure long-term growth and prosperity of this Industry. While VAT on other flooring substitutes such as granite and marble stands at 5%, the tax on ceramic times is as high as 15%. Similarly incidence of excise duty is also 12.36% against 6% on other flooring substitutes such as granite and marble.

To press for such genuine demands, not considered since long despite repeated representation and requests, the ceramic unit owners have decided to stall indefinitely, all production activities from midnight of November 27, 2013.

It is worthwhile to mention that, stooping of production will lead not only to daily production loss of around Rs. 35 crore, but it will also have an adverse impact on raw material supplier industry, packaging industry, transportation industry, source of livelihood for about 4 lakh people, retailers & distributors. Further, the government, electricity companies and gas suppliers will face a daily revenue loss of Rs. 7 crore, Rs. 2 crore and Rs. 10 crore respectively.