Morbi ceramic exporters resumed Gulf shipments via the Strait of Hormuz, but the industry faces a tough road ahead. Exports may fall 40 per cent to ₹12,000 crore in FY27. "In place of 200 containers, we have started getting 20," said Bhavesh Varmora, as many local units remain shut.
Tentative resumption of Gulf shipments via Strait of Hormuz offers limited relief as nearly 40% of units remain shut
Morbi-based ceramic exporters are beginning to find their way back to the Gulf as shipments through the Strait of Hormuz gradually resume, but the recovery comes amid a deepening crisis for the industry, with exports projected to fall 40 per cent to around ₹12,000 crore in FY27 and nearly 40 per cent of the ceramic hub's units still shut.
Varmora Granito Ltd, one of the prominent tile manufacturers in the Morbi cluster, dispatched 18-20 containers to the UAE and Iraq last week, marking a tentative return to a trade route that had become difficult to access amid shipping disruptions and a shortage of containers. "Earlier, no containers were available. Now, in place of 200 containers, we have started getting 20," Bhavesh Varmora, Chairman and Managing Director of Varmora Granito, told businessline. Some shipping lines have resumed services through the Strait of Hormuz as the geopolitical situation has eased, he said.
The improvement, however, remains limited. Varmora requires around 150-200 containers to meet its shipping requirements, leaving a substantial gap between the capacity it needs and the containers it can currently secure. While the resumption of shipments could help exporters clear pending orders, the availability of containers and elevated freight costs continue to constrain the pace of recovery.
For Morbi, one of India's largest ceramic manufacturing clusters, the disruption has hit several export markets simultaneously. The industry's annual exports, which typically stand at around ₹20,000 crore, are expected to decline to approximately ₹12,000 crore in FY27, a contraction of ₹8,000 crore or 40 per cent, according to industry estimates. "It is going to be a tough year for the Morbi ceramic industry. Exports for a large number of players in Morbi through Hormuz remain closed. Secondly, due to Houthi activity, trade through the Red Sea remains impacted," said K G Kundariya, a veteran ceramic manufacturer from Morbi and former president of the ceramic association.
Exports to the US have also been affected by anti-dumping duties on Indian ceramic products, while shipments to Europe have been constrained by container shortages, Kundariya said. The Russia-Ukraine conflict has added to the uncertainty in other overseas markets, further complicating the outlook for manufacturers dependent on export demand.
Some exporters have been routing limited cargo to Dubai through Oman to work around the disruption, but alternative routes have not been sufficient to offset the decline in shipments. Around 30-40 per cent of Morbi's ceramic units remain shut amid the difficult export environment, according to industry estimates.
For Varmora, the resumption of Gulf shipments is significant because West Asia accounts for around 18 per cent of its total exports. The company has traditionally maintained a sales mix of about 80 per cent in the domestic market and 20 per cent overseas, with the US and Europe among its other key export destinations. The impact of the disruption is already visible in its numbers. Varmora's export volumes declined to 2.03 million square metres in the first half of the current financial year from 3.42 million square metres in the year-earlier period, while export revenue fell 18 per cent, according to the company's management.
Freight rates have begun to ease from their peaks, but remain substantially higher than pre-disruption levels. According to Varmora's estimates, rates on routes to Europe and other western markets, which had risen from $1,500-2,000 per container to around $8,000, have declined to approximately $6,000-6,500. Freight rates on US routes have eased to around $5,500 from about $7,500.
The combination of higher logistics costs and uncertain shipping schedules has left manufacturers struggling to fulfil orders economically, even where overseas demand persists. The resumption of services through Hormuz could provide some relief, but a sustained recovery will depend on shipping lines restoring capacity and container availability improving across routes. For the wider Morbi cluster, the challenge extends beyond the Gulf. Disruptions in the Red Sea, trade barriers in the US and logistical bottlenecks affecting Europe have narrowed the options available to exporters at a time when a significant part of the industry's production capacity remains idle.