They said that the capacity utilisation of the industry was scaled down from 80 per cent to 1994-95 to 60 per cent in 1997-98 mainly due to weak demand of only 15 per cent induced by slow down in construction activity across the country. Riding on the industry, sentiment ICCTAS chairman Vijay Aggarwal said that several tiles manufacturing firms are running at very low capacity as compared to their installed capacity which resulted reduction manpower utilisation.

Further, over Rs 1,000 crore have been invested in the last fouryears by various firms to increase their capacity in anticipation of revival of the construction market and now the huge capital is lying idle, Aggarwal said. Aggarwal urged the government to reduce the excise duty and bring it at par with other ceramic products so that the industry is in a position to reduce their prices in order to create demand for the ceramic tile products both for the local as well as export market. Our products have to be made affordable and comparable with others and for this, a reduction in excise duty is essential to neutralise the rising input costs like fuel, freight and the additional burden of customs duty on raw materials that are imported, he said.

ICCTAS feels that even on the event of the reduction of the duty from 25 to 15 per cent, the revenue would be neutral in the budget year of 1998-99 and will be a revenue earner for the government from 1999 onwards owing to the expected surge in sales following reduction in prices. For hygiene purpose and to have an easy to cleansurface in bathrooms and kitchen, the housing sector can not ignore glazed ceramic tiles and this should be a part of major thrust area of housing. In China, it is compulsory for builders and owners to have ceramic tiles in kitchen and bathrooms for hygiene purpose. According to industry sources, the ceramic tile industry will witness a major shakeout in the coming months since several manufacturers are running the plants below the scale of economy and incurring huge losses. Small players like Akhil Ceramics, Decora Ceramics, Eastern Ceramics and Parsuram Pottery have been closed permanently while players like Kera Sinter, Meltex Ceramics and Universal Tiles were referred to bier as sick units. Even big players like Spartek, Pedder Ceramic and Bell Ceramic are in a financial mess and verge of collapse.

In the industry, unorganised sector contributes about 42 per cent of the market share with a turnover of nearly Rs 420 crore while the organised manufacturing firms,numbering 25 units, accounted for 58 percent of total tile production of 9,56,000 metric tonnes per annum in 1997-98.

The minimum capacity to achieve economy of scale is 80,000 tonne per annum. From 15 per cent annual growth rate commencing 1993, the industry registered an annual growth rate of 25 per cent every year till 1996 as the excise duty kept falling from the peak of 55 per cent in 1993 to 25 per cent now, thanks to the meaningful representations made by the council to the union ministry.

Even the unorganised sector accounted for 41 per cent of the tile production in the country which stood at 1.08 million tonnes. The industry has also high potential for exports with abundance of natural raw materials and skilled manpower and this can be increased from the current level of Rs 120 crore to Rs 500 crore in the next three years. Aggarwal said that Indian tile industry has ample to contribute by way of capturing a respectable share of world production which currently stands at nearly 1.2 per cent of world production (US dollar fivebillion).

In fact, several multinational firms in tile business have shifted their production base to Asian nations mainly because of economic scale of production and availability of cheap manpower. The countries like China, Indonesia and Malaysia produce twice as much as India and possess a better market share for the reason that their industrial units are economically viable. To compete globally, our plants must be geared up to 10 million square metres capacity so as to offer special seizes and designs in the long run.