India’s Tile Industry Faces Consolidation Amid Rising Gas Costs

NOIDA — India’s tile manufacturing sector is bracing for a period of profound structural change, with industry experts predicting that approximately 20% of the country’s inefficient tile production facilities will shut down in the coming years. This wave of consolidation is largely being driven by surging energy costs, particularly for natural gas, and the escalating financial burden of maintaining older, less efficient machinery.

Abhishek Somany, Managing Director and CEO of Somany Ceramics, highlighted the severity of these challenges in a recent industry interview. According to Somany, the convergence of geopolitical tensions in West Asia and a sharp rise in the cost of imported equipment is forcing a "survival of the fittest" scenario within the sector, particularly in Gujarat’s Morbi cluster, which serves as the heart of India’s ceramic manufacturing industry.

Geopolitical Friction and Fuel Volatility

The ceramic tile industry, which relies heavily on gas for high-temperature kiln firing, has been disproportionately affected by recent global supply chain disruptions. Geopolitical instability involving the United States, Israel, and Iran has led to severe constraints on international supply lines for liquefied petroleum gas (LPG) and propane.

The impact was immediate and localized. Following the collapse of these supply chains earlier this year, a significant portion of the Morbi ceramic belt was forced to suspend operations for nearly 45 days. The industry, already grappling with high fixed costs—including labor and bank interest—faced deep financial strain during this shutdown. When operations resumed, many manufacturers pivoted to Piped Natural Gas (PNG) as an alternative, only to encounter a sharp, month-over-month surge in pricing as demand across the industrial cluster spiked simultaneously.

Consolidation and the Future of Manufacturing

For players like Somany Ceramics, the current market turbulence serves as a catalyst for industry-wide maturation. "I think 20 per cent of tile manufacturing plants in India will shut down," Somany stated. He compared the current trend of consolidation to the regulatory impact of the Real Estate (Regulation and Development Act) (RERA) on the housing sector, which significantly professionalized the market by weeding out inefficient or non-compliant developers.

Smaller manufacturers, often lacking the capital to invest in energy-efficient technology or the scale to hedge against fuel price volatility, are finding it increasingly difficult to compete. Furthermore, the rising cost of importing state-of-the-art machinery from Europe—exacerbated by a strengthening Euro—has created a high barrier to entry for firms looking to upgrade their facilities.

Industry Outlook and Demand Drivers

Despite the manufacturing-side strains, major players remain optimistic about long-term demand. The domestic housing market, driven by government infrastructure initiatives and an ongoing urban housing upcycle, continues to provide a robust pipeline for growth.

Market data indicates that large-format tiles are becoming the "next normal," with commercial and residential demand shifting toward premium options. Companies that have invested in capacity, diversified their energy sources—such as utilizing bio-fuels and fungible fuel management systems—and focused on value-added product mixes are expected to emerge from this consolidation phase with stronger market positions.

Quote Section

"According to officials and industry analysts, the current crisis is a 'perfect storm' resulting from international supply line collapses, surging industrial gas prices, and the burden of persistent fixed operational costs. Industry leaders stated that the only path for survival for smaller, inefficient plants is to modernize, though the prohibitive cost of imported equipment makes this transition increasingly difficult."

Why It Matters

For builders, dealers, and homeowners, this consolidation phase suggests a shift toward a market dominated by larger, more resilient companies. While this may lead to more stable supply chains in the long term, the immediate impact includes price volatility and a move toward 100% advance payment policies in key hubs like Morbi, as manufacturers seek to mitigate the financial risks associated with fuel price hikes.

Key Facts at a Glance

• Projected Closures: Nearly 20% of India’s tile manufacturing plants are expected to shut down.

• Primary Hub Impact: The Morbi ceramic cluster in Gujarat, which hosts over 700 units, is the epicenter of the current industry disruption.

• Price Hikes: Manufacturers announced a 10% to 20% price increase across tile categories, effective June 1, 2026.

• Market Growth: Despite consolidation, the Indian tile market continues to grow, driven by real estate upcycles and increased adoption of large-format tiles.

FAQ

Why are tile prices increasing in India?

Prices are rising due to a combination of geopolitical supply chain disruptions, a 45-day shutdown of manufacturing hubs, and surging industrial gas prices.

What is causing the industry consolidation?

Smaller, inefficient plants that cannot absorb the high costs of fuel or afford expensive modern machinery are struggling to stay operational.

How are large companies like Somany Ceramics coping?

Large players are leveraging fungible fuel systems (switching between natural gas, LPG, and bio-fuels), upgrading equipment for value-added products, and focusing on domestic growth.

Will the price hikes affect homebuyers?

While tile prices have risen, industry experts note that labor costs dominate construction budgets, meaning material price fluctuations have a relatively muted impact on the total project budget.

Official Sources

• Somany Ceramics Q4 FY26 Financial Disclosure

• Morbi Ceramic Manufacturers Association Price Notifications

• CRISIL Ratings Sector Report: Ceramic Industry Analysis