Ceramic tile sector to maintain growth in medium term: Report.

The ceramic tile industry, which has recorded phenomenal growth through value-added products and geographical reach, has the potential to maintain its momentum in the medium term, a report said here.

Despite slowdown in the real estate sector and adverse macroeconomic environment, low per capita consumption of tiles in the country, rapid urbanisation, increasing disposable income of nuclear families, untapped rural market and stable replacement demand is envisaged to augur well for the sector, Care Ratings said.

The number of ambitious programmes launched in the last two years by the Centre, like Smart Cities Mission, Swachh Bharat Abhiyaan (Sanitation for All by 2019), Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Housing for All by 2022 would act as big push in demand for the ceramic industry in years to come, it said.

The government's decision in March 2016 to impose anti-dumping duty of USD 1.37 per square metre (SQM) on all vitrified tiles imported from China is also expected to provide level playing field to the domestic players, especially in South India.

Till 2013, there was anti-dumping duty on Chinese vitrified tiles. However, after the removal of duty by the government, Chinese companies dumped tiles in India which exerted pressure on domestic manufacturers on account of lower freight rates from China to South India, it said.

The implementation of Goods and Service Tax (GST) will also be a welcome change for the ceramic tile industry.

Currently, manufacturers pay approximately 26 percent as indirect tax, including excise duty, central sales tax (CST) and value added tax (VAT).

Care Ratings pointed out that the GST will create a seamless national market for the organised players, resulting in removal of inter-state barriers and improvement in supply chain.

GST will also bring the unorganised segment on a similar platform and reduce the price differential between them and the organised segment.

Care Ratings said India has one of the fastest growing ceramic tiles markets in the world.

Despite increase in consumption, per capita consumption of ceramic tiles in India is only 0.59 SQM.

India lags behind Brazil, China and Vietnam which have per capita consumption of 4.12, 3.33 and 2.80 SQM, respectively.

This exhibits an exponential growth potential for the industry, the report said.

The industry enjoys the unique advantage of being largely indigenous with abundance of raw materials, labour, technical skills and infrastructural facilities.

It is estimated that the ceramic tile industry employs over a half a million people, both directly and indirectly.

Largely dominated by family-owned and managed units, the Indian ceramic tile industry is the world's third largest manufacturer of ceramic tiles at 825 million square metres (MSM), after China and Brazil.

India is also the third largest consumer of tiles in the world with about 6.25 percent of all global ceramic tile consumption, the report said.

Source : moneycontrol.com