The containers largely carry wall tiles, floor tiles, vitrified tiles and sanitaryware destined for countries in West Asia. Each container carries goods worth an average of Rs 4–4.5 lakh and is stuck either at Mundra Port in Kutch or at ports in the Gulf, an industry leader said.
The size of the ceramic market in India is about Rs 75,000 crore with Morbi in Gujarat accounting for about 90% of India’s production in the sector. The West Asia conflict has affected earnings from orders that have already been dispatched for delivery.
Notably, India’s ceramic exports stand at approximately Rs 21,000 crore, of which the Gulf Cooperation Council (GCC) nations and nearby countries account for around Rs 6,000 crore — roughly 25%.
Industry leaders have raised concerns that exporters are not only facing shipping surcharge costs, demurrage charges and uncertainty over deliveries, but are also having to make payments for goods already shipped, compounding losses caused by the conflict.
Speaking to The Indian Express, Nilesh Jetpariya, Chairman of the Panel for Ceramics at the Chemical and Allied Products Export Promotion Council (CAPEXIL), said: “The biggest challenge at the moment is that there are 1,500 containers already loaded for Gulf countries and other destinations affected by the war. They are either lying at Indian ports, are on transiting ships, or are at ports in those countries. The average container freight cost is between $300 and $600. Shipping lines have imposed a war risk surcharge of $4,000–5,000. This doubles the price of the product, and if the buyer refuses to take delivery at this rate, the exporter will have to pay the surcharge along with the return freight cost as well.”
The average profit per container is about $300, which is completely wiped out by these charges, Jetpariya said.
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“If an exporter is sending 50 containers, this comes to more than Rs 2 crore worth of products. How can anyone shell out this amount? We have requested the Union Ministry of Commerce and Industry as well as the Ministry of Ports, Shipping and Waterways to look into these surcharges and ask shipping lines to rescind them under the current circumstances,” he said.
Another issue is that loaded containers meant for West Asia are unable to be transported and are stuck at ports, incurring demurrage charges.
The Central Government, on March 6, issued a notification laying down Standard Operating Procedures (SOPs) for major ports to mitigate the impact of geopolitical disturbances in West Asia.
A letter from Transport Bhavan asked major ports to permit the storage of cargo destined for West Asia as “transhipment cargo” during the affected period.
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It also asked ports to allot additional storage areas, facilitate berthing of ad-hoc call vessels for such cargo, facilitate ‘back-to-town’ movement of cargo, provide priority handling for perishable cargo, give priority consideration to export cargo returning from West Asia, and facilitate additional bunkering demands.
The letter also asked ports to “consider requests from users regarding reduction, waiver or remission of charges on a case-to-case basis, depending on prevailing conditions at the port.”
Notably, the Ministry of Finance, through the Central Board of Indirect Taxes and Customs (CBIC), in a letter to all customs officials on March 8, also laid down SOPs for the return of export cargo from international waters due to the closure of the Strait of Hormuz, under Section 143AA of the Customs Act.
The government, in the letter, prescribed procedures to facilitate trade and ensure expeditious handling of cargo brought back to Indian ports due to the closure of the Strait of Hormuz or similar disruptions.
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“In all such cases, the vessel shall be permitted to berth only at the same Indian port from which it departed, except in cases of transhipment,” the letter stated.
Jetpariya, who also owns ceramic units in Morbi, said that apart from the immediate financial losses, there are also long-term concerns.
“Nobody knows how long the conflict will continue, so all orders from Gulf countries are also on hold,” he said.
