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As many as 250,000 people, employed directly and indirectly with the Morbi-based ceramic industry, second largest in the country, are going to be affected with 600 manufacturing units deciding to shutdown operations indefinitely over frequent increase in natural gas prices and lack of support from state government over various issues.
The ceramic players will halt production from Wednesday midnight till their demands for cheaper gas, revision of value added tax (VAT) rates and excise duty on ceramic products is resolved.
The main issues of the industry includes restricted gas supply, rate hike and compulsory consumption clause by Gujarat State Petroleum Corporation (GSPC) Ltd, implementation of guidelines issued by Gujarat Pollution Control Board (GPCB) to stop use of coal-based gasifiers, revision of VAT structure to match that of substitutes such as marble, granite and revision of excise duty for the ceramic products.
According to the associations of ceramic manufacturers, daily production loss as a result of shutdown would be nearly Rs 35 crore, while per day loss in government tax revenue would be Rs 7 crore, revenue loss to gas supplier would be Rs 10 crore and electricity companies' loss was pegged at Rs 2 crore.
"In recent times, one of the major factors affecting production costs of ceramic industry has been the ever-increasing natural gas prices. Over the past two years the prices have increased by 130 per cent leaving the industry in no position to compete against imported goods from China," said Chunilal Patel, general secretary, Morbi-Dhuva Glaze Tile Association.
"With the recent hike in gas price by GSPC, we have to pay Rs 47-48 per standard cubic meter (SCM). This will increase our input cost by 10 per cent, which is already high," he said.
According to Patel the total gas consumption by all the units in Morbi was nearly 2.8 million SCM per day.
"Despite several representations to the local leaders and GSPC, over problem have not been addressed.
Over and above this GSPC has added a particular clause in the gas supply agreement, which makes consumption of 80 per cent of the total allocated gas quota mandatory, said Sukhdev Patel, president, All Gujarat Granito Vitrified Association.
"The unit is liable to pay charges for that much amount of gas even if it could not use that much quantity of gas. Such stipulation is no way practical considering the operational peculiarity of the industry and therefore, it is completely unacceptable by ceramic unit owners," he added.
The association of the Morbi-based units has submitted memorandum to the district collector expressing their grievances and requesting his support to resolve their issue at the earliest.
"It has been two days since we gave the memorandum to the district collector but nothing has been done. Even talks at the state government level through local MLA Mohan Kundariya did not prove helpful as the government said it cannot bring down gas prices. So we have decided to go on indefinitely shutdown from midnight of November 27 till our demands are addressed," said Divyesh Patel, president of Morbi-Dhuva Glaze Tile Association.
According to Divyesh Patel Morbi-based ceramic industry employees nearly 100,000 people directly and 150,000 people through associated industry while its turnover was around Rs 22,000 crore annually.
The association also wants the VAT to be reduced from present 15 per cent to 5 per cent, at par with substitutes like marble and granite . Similarly, they also want excise duty to be revised to 6 per cent from present 12.36 per cent.
Morbi-based ceramic manufacturers had raised price of products by 20 per cent with before Diwali, following Gujarat high court's direction for strict implementation of the guidelines issued by Central Pollution Control Board (CPCB) with regard to use of gas-based furnaces instead of coal-based furnaces. There are still nearly 200 units using coal-based furnaces in Morbi.
