Iran-US conflict puts India’s $7 billion ceramic hub in Gujarat at risk: ‘If the war doesn’t end, we’ll have to shut’

A one-and-a-half-hour drive from Rajkot, the thriving industrial hub in Gujarat’s Saurashtra region, takes you to Morbi town. Located on the Machchhu River, Morbi is known worldwide as India’s ceramic hub, producing nearly 90 per cent of the country’s ceramic products.

Thousands of miles away from the escalating Middle East conflict that has disrupted global fuel-LPG supplies amid the blocking of the Strait of Hormuz, Morbi today stares at the possible shutdown of its ceramic factories, putting hundreds of thousands of livelihoods at risk in the hub of the $7 billion ceramic industry, according to the factory owners that Mint spoke with.

At his sprawling plant, one among hundreds in Morbi, Vinod Ambani says the industry had last faced such a fearful crisis during the COVID-19 pandemic in 2020-21. Speaking with Mint on the phone, Ambani fears that if gas supplies don’t resume by 15 March, not just his but all factories will have to shut down.

“The LNG and propane supply stopped on 10 March. Now, we are relying on Gujarat gas supply. And we fear this gas which we get from pipeline might not last 15 March,” said Ambani, the owner of Livolla Granito on Wednesday, 11 March.

As many as 300-400 factories in Gujarat’s Morbi are on the verge of closure due to disruption in gas supply in the aftermath of the US-Israel strike on Iran, the industry representatives said. Over 200-250 factories, about 25 per cent of those in Morbi, have already stopped operations, according to people Mint spoke with.

The Morbi ceramics industry runs on two types of fuel: propane and natural gas. An average of 55 lakh cubic metres of propane is consumed in the industry each day, the representatives said. Propane-LPG is delivered to these units by road in tankers via oil companies and local traders.

Consumption of natural gas is approximately 25 lakh cubic metres per day and is supplied to about 150 units by Gujarat Gas Limited, a state-run company.

As things stand, the ceramic industry in Morbi is facing an acute shortage of propane and natural gas, both of which are key to its operations. The fuel is particularly used for firing kilns and drying processes.

India’s ceramic tiles market reached 1,255.97 million square metres (MSM) in 2025 and is projected to grow to 1,676.95 MSM by 2034, according to IMARC Group, a global management consulting and market research firm.

Morbi – the ceramics hub of India

Indian ceramics production is around ₹70,000 crore annually, of which ₹50,000 crore is consumed in the domestic market and the rest, ₹20,000 crore, is exported.

A 2024 report by the Industrial Extension Bureau (iNDEXTb), a Gujarat government agency, pegged India’s ceramic tile exports at $2.5 billion.

Morbi accounts for approximately 80 to 90 per cent of India’s total ceramic exports and nearly 90 per cent of Gujarat’s ceramic production. Morbi ranks as the world’s second-largest ceramic cluster and a key pillar of India’s ceramic economy, according to state government figures shared with Mint during the Vibrant Gujarat Summit in Rajkot.

Morbi district has around 1,200 ceramic units with an annual production of approximately 60 lakh tonnes. The industry provides direct and indirect employment to about 9 lakh people.

Morbi recorded ceramic exports worth approximately ₹15,000 crore in 2024–25, exporting mainly to the United States, France, Germany, Oman, and Sri Lanka, according to the state government.

The supply of propane by tankers has become irregular since the crisis in West Asia erupted, and only 30 per cent of the industry in Morbi gets the supply from Gujarat Gas, a city gas distribution company, another factory owner, who did not want to be named, told Mint.

India primarily imports its Liquefied Natural Gas (LNG) from Qatar, which supplies nearly half of its needs, followed by the United Arab Emirates (UAE), the United States, Oman, Angola, and Australia. For LPG (propane/butane), India relies heavily on the Middle East, with Saudi Arabia, the UAE, Qatar, and Kuwait accounting for over 95% of imports.

“Most of our gas supply comes from Qatar. If the war doesn’t end, we would need to shut completely,”Āmbani said.

Manoj Arvadiya, president of the Morbi Ceramic Manufacturers Association (Vitrified Tiles Division), said the situation could worsen in the coming days if propane supplies are not restored and suppliers fail to issue clear guidelines.

“Propane supply has been affected badly in last few days. Around 100 units dependent on the fuel have already shut down,” Arvadiya said. He warned that nearly 400 more propane units may be forced to halt operations within days if the supply is not restored.

While factories using propane have already shut down or are close to doing so due to shortages, those that depend on natural gas have begun receiving force majeure notices from suppliers, forcing them to suspend production, news agency Reuters reported.

“Gujarat Gas customers are still operating, as the resource is available to them at present. However, if we calculate based on the current availability, which is roughly around 50 per cent, even those units may face closure by March 15- 20,” Arvadiya said.

Gujarat CM concerned

Gujarat Chief Minister Bhupendra Patel had expressed concern over the situation. Industry representatives had earlier warned that the Morbi ceramic sector could face a large-scale shutdown if gas supplies from the Gulf region remained disrupted due to the geopolitical tensions affecting shipments passing through the Strait of Hormuz.

“The government is trying to find a solution,” Ambani said.

The US and Israel launched military strikes on Iran on 28 February, killing Iranian Supreme Leader Ayatollah Ali Khamenei.

Following the military offensive, Iran carried out a wave of attacks mainly targeting Israel and American military bases in several Gulf countries, including the UAE, Bahrain, Qatar, Kuwait, Jordan and Saudi Arabia.