Morbi Ceramic Exporters Resume Gulf Shipments as FY27 Exports Face 40 Percent Contraction

Ceramic exporters based in the Morbi manufacturing cluster in Gujarat are beginning to send shipments to the Gulf again as transport through the Strait of Hormuz gradually resumes. Despite this tentative return, the broader industry faces a severe downturn, with annual exports projected to shrink by 40 per cent to approximately ₹12,000 crore in FY27. Industry estimates also indicate that nearly 40 per cent of the ceramic hub's production units remain shut.

Varmora Granito Ltd, a prominent manufacturer in the cluster, recently dispatched 18 to 20 containers to Iraq and the UAE. This marks a cautious return to a route that previously faced severe access issues due to shipping disruptions and a shortage of containers. Bhavesh Varmora, Chairman and Managing Director of Varmora Granito, noted that while some shipping services through the Strait of Hormuz have resumed as geopolitical conditions eased, container availability remains critically low. Instead of the 200 containers required to meet its shipping needs, the company is currently receiving about 20.

The export contraction spans multiple international markets simultaneously. According to K G Kundariya, a veteran ceramic manufacturer and former president of the local ceramic association, the industry's annual exports of roughly ₹20,000 crore are expected to drop by ₹8,000 crore. Kundariya pointed out that trade through the Red Sea remains impacted by Houthi activity, shipments to the United States face anti-dumping duties, and trade to Europe is constrained by container shortages. Furthermore, the conflict between Russia and Ukraine has added ongoing uncertainty to other overseas markets.

To navigate the disruption, some exporters have routed limited cargo to Dubai through Oman, though alternative paths have not offset the broader decline in shipments. For Varmora, West Asia accounts for roughly 18 per cent of total exports. The company traditionally maintains a sales mix of 80 per cent domestically and 20 per cent overseas. The impact of the logistical challenges is evident in the firm's financial half-year figures, which show export volumes dropping to 2.03 million square metres from 3.42 million square metres year-on-year, accompanied by an 18 per cent fall in export revenue.

Logistics costs continue to weigh heavily on manufacturers. Although freight rates have receded from their peaks, they remain elevated compared to pre-disruption levels. Rates on routes to Europe and western markets, which previously surged from $1,500-2,000 per container to $8,000, have fallen to approximately $6,000-6,500. Similarly, US route freight rates have eased from about $7,500 to around $5,500.

While the resumption of services through the Strait of Hormuz offers some relief for clearing pending orders, a sustained recovery for Morbi's ceramic sector depends on broader improvements in container availability and the restoration of shipping capacity across multiple international corridors.

"The situation in Morbi highlights how vulnerable traditional manufacturing clusters are to global logistical bottlenecks and geopolitical shifts. When multiple key trade corridors face simultaneous disruptions—from the Red Sea to anti-dumping duties and container shortages—even established exporters experience severe capacity utilization drops. For businesses reliant on overseas demand, maintaining a balanced domestic market exposure and building supply chain resilience are no longer optional strategies; they are essential for long-term operational survival." — Dr. Shishir Gupta, Founder & CEO, StartupLanes