AS THE Iran conflict entered its 10th day on Monday, a fuel shortage caused by the shutting down of the Strait of Hormuz led to nearly a quarter of the tile industry units halting production.
This comes in light of the already diminished propane supplies that are said to have caused a shutdown of a number of ceramic units dependent on the fuel, which mainly comes from Qatar and other Gulf nations. The Indian Express first reported on the looming crisis on March 3.
The Morbi ceramics industry runs on two types of fuel: propane and natural gas. An average of 55 lakh cubic metres of propane per day is consumed in the industry and is used by about 500 units. Propane-LPG is delivered to these units in tankers by road through Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited, via 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.
Morbi is the second-largest tile manufacturing cluster in the world and accounts for about 90 per cent of India’s ceramic manufacturing business. A 2024 report by the Industrial Extension Bureau (iNDEXTb), a Gujarat government arm, pegged exports of ceramic tiles from India at $2.5 billion.
Among the 125-plus countries to which India exports tiles are Saudi Arabia, Mexico, Kuwait, United Arab Emirates, Iraq, Oman, Indonesia, the United Kingdom, and Poland, with Russia and Latin America emerging as newer markets. According to the report, Morbi has more than 1,800 ceramic and tile manufacturing units.
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Haresh Bopaliya, President of the Wall Tiles division of the Morbi Ceramic Manufacturers Association, told The Indian Express, “About 150 of the 650 units have shut down, but the others are still receiving supplies. The exact condition of propane stocks for industrial use is not yet certain. We should have a clearer picture in the coming days.”
There are some units that have both natural gas pipelines and tankers to store propane. Those who ran out of propane but had PNG pipelines approached Gujarat Gas to supply fuel to keep their kilns burning. Gujarat Gas, however, invoked force majeure — a legal provision that releases a company from contractual obligations due to extraordinary circumstances — to restrict gas supplies to its industrial clients.
In a regulatory filing to the Bombay Stock Exchange on March 4, Gujarat Gas said:
“Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, this is to inform that in light of the ongoing war in the Middle East region impacting the gas supply scenario, the availability of R-LNG has become severely constrained. In light of the above situation, the company has issued force majeure notices to its industrial customers in terms of the provisions of the gas supply agreements, restricting the daily contracted quantity effective from March 6, 2026.”
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It further stated, “Acts of war are not covered under the insurance taken by Gujarat Gas Limited. The likely impact of force majeure, which is currently an ongoing event, cannot be estimated at this point of time.”
While the fuel shortage and alternative procurement from outside Gulf Cooperation Council(GCC) countries remains a developing situation linked to the status of the conflict and blockade of the Strait of Hormuz, Gujarat Gas — which had earlier warned that new customers would only receive supplies if the situation improved — has curtailed supplies to even its existing industrial customers by up to 50 per cent, industry leaders said.
Gujarat Gas is yet to respond to The Indian Express regarding the curtailment of fuel supply.
A major propane trader supplying a large share of the Morbi ceramics market told The Indian Express: “At present, 70 per cent of imported propane comes from Qatar through the Strait of Hormuz. A significant portion of propane-LPG must first be used for household gas purposes, and only the excess is supplied to industry. The current fuel shortage has caused massive disruption. In the first week of March, some ships were still arriving or had just arrived at ports carrying propane, so supplies have continued. However, in the present context, there is a lack of clarity about what happens next because the situation remains fluid.”
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“Replacement supplies for the industry do not look possible on an immediate basis because the government’s first priority is to provide gas for household use,” an industry leader said.
On the short-term outlook for propane supplies and alternatives to Gulf countries, a fuel trader, speaking on condition of anonymity, said: “There is a geographical advantage in importing fuel from the Gulf. I do not think there is a short-term replacement for GCC countries in the context of propane procurement.”
“Currently, it does not look like the existing supplies will hold beyond the month of March if the Strait of Hormuz is not opened for traffic. Propane can come from the US, but it takes 30–45 days for ships to arrive through the Suez Canal, and costs escalate due to freight charges over such long distances.”
One of the presidents of the Morbi Ceramics Manufacturers Association, speaking on condition of anonymity, said: “We are using propane as supplies are intermittent and limited. Meanwhile, Gujarat Gas has curtailed natural gas supply to 50 per cent of demand. Those who can keep their units running are doing so, while the rest have temporarily suspended manufacturing.”
