Gujarat's small and medium industries are anxiously waiting for Chinese president Xi Jinping's visit to the state. Considered to be the backbone of Gujarat's economy, small and medium enterprises making ceramics, garments and chemicals have lost out to China - both in Indian as well as exports markets - in a big way in recent years.
Ceramic products imported from China are making a dent in the sales of ceramics in India as import value of Chinese ceramic products into India has grown from $237 million in 2007 to $484 million in 2012, clocking compounded annual growth rate (CAGR) of 15%.
An analysis by the apex industry body, Assocham, on India's ceramic industry has revealed that with a huge share of 66% in India's total ceramic imports worth over $734 million as of 2012, China has emerged as a major supplier of ceramic products to the country, thereby adversely impacting profit margins of existing domestic producers. So much so that certain ceramic units are facing closure as they are not able to bear the ever-rising production costs.
The Chinese imports have majorly affected the ceramic industry in Morbi which produces almost 90% of the wall, floor and vitrified tiles in India. "The biggest impact is on the vitrified tiles category. The Chinese tiles are at least Rs 5 to Rs 6 per square feet cheaper than Indian tiles," said an office-bearer of Morbi Ceramic Association.
Adding to their woes is local politics in Morbi, which is hampering the restarting of coal-based gasifiers despite relief from both the Gujarat high court as well as the Supreme Court. The Gujarat high court had last year banned coal-fired gasifiers following a public interest litigation. "Given the high cost of natural gas, we cannot compete with China," he said. Even after the Gujarat high court lifted the stay on the condition that units install third-generation coal-fired gasifiers - a decision later upheld by the Supreme Court - the Gujarat government has not given necessary clearances due to pressure from local leaders.
"Earlier, there was an anti-dumping duty on Chinese tiles which was removed. Since then Chinese tiles have flooded the Indian market. We have written to the state as well as to the central government about this issue, but there has been no response yet," the office-bearer said.
The chemical and garment industries are also facing a stiff competition from Chinese products when it comes to exports. "We are unable to offer the price that China offers. It is usually 7% to 10% cheaper than our products because of which our exports suffer," said Vijay Purohit of the Gujarat Garment Manufacturers' Association. The same is the case with chemicals when it comes to exports.
Source:- timesofindia.indiatimes.com
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