The unorganised tiles makers at the country's largest ceramic cluster in Morbi have taken up a unique initiative to keep a check on the bill-book of the peer players. The move is believed to curb under-billing and tax evasion thereby making the competition free and fair.
"The tiles industry in Morbi and Dhuva area is mainly unorganised and some of the units followed unfair practices like under-billing to beat competition with established players. This led to tax-evasion by such units, which lured some of the other units too to follow the suite. This spoils the competition as well as the name of the industry. So the association has taken up this initiative to curb illegal practices of under-billing," said an industry insider requesting anonymity.
By way of under-billing, the units sell products at a price lesser than the maximum retail price (MRP) generating unhealthy price-war among the tiles manufacturers and also causes loss to the exchequer.
The cluster of over 200 wall tiles units at Morbi-Dhuva region holds nearly 70 per cent share in the India's total tiles production.
"There was a problem of tax evasion mainly in the unorganised sector. The initiative will be helpful to the industry in the larger interests in terms of improving the competition. The move could also increase the prices of the final products," said Hasmukh Patel, managing director, Asian Granito India - a leading tiles manufacturer in Gujarat.
Around 200 members of the Morbi-Dhuva Tiles Manufactures Association have supported the initiative and ensured that the members follow the trend. If a unit found guilty of irregularities in billing, a letter describing the details of the unit would be sent to the concerned department in the government and the association will also take up punitive action against the unit. The process, which calls for voluntary participation took off some ten days back and so far has not reported any incidence of malpractices.
The industry that produces around one million square meters of tiles every day has posted 15-20 per cent growth over last year. The size of the industry is expected to touch Rs 10,000 crore in the current financial year.