Morbi Gulf Shipments Resume as Ceramic Export Outlook Remains Weak

Summary

Morbi’s ceramic exporters have tentatively resumed Gulf shipments through the Strait of Hormuz, bringing limited relief to Gujarat’s manufacturing cluster. Nearly 40% of units reportedly remain closed, while the FY2026–27 outlook points to a possible 40% export contraction. Freight costs, energy expenses and production disruption continue to weigh on recovery.

Partial restart falls short of normalisation

Morbi Gulf shipments are beginning to move again, but the resumption remains tentative rather than a return to normal trading conditions.

The restart provides an opening for exporters serving Gulf customers after prolonged disruption to maritime logistics. However, continued factory closures indicate that improved shipping access has yet to translate into a broad manufacturing recovery.

The projected 40% decline in FY2026–27 exports is an outlook, not a completed full-year result. The pace of shipments and factory restarts over the remaining months will determine the eventual outcome.

Earlier export data show the scale of pressure

The latest development follows a difficult opening to the financial year for India’s ceramic-tile exporters.

An Equirus Securities assessment reported that national export volumes fell 46% year on year to approximately 100 million square metres during April–July 2026. Export value declined 34% to around ₹4,200 crore.

Those figures cover India’s ceramic-tile exports, rather than Morbi alone, and describe an earlier reporting period.

The assessment linked the downturn to West Asian disruption, higher freight costs and production difficulties. It also identified trade restrictions and expanding manufacturing capacity in overseas markets as continuing competitive pressures.

A recovery in Gulf sailings therefore addresses one constraint within a wider set of commercial challenges.

Energy costs complicate production recovery

Morbi’s difficulties extend beyond getting finished products aboard vessels.

The Equirus assessment described disruption to propane and LNG supplies from the Persian Gulf, which affected production during March and April. It estimated that manufacturers’ overall industrial costs increased by 25–40%, depending on product category and energy arrangements.

Ceramic production is energy-intensive, making fuel availability and pricing important to factory economics. Restoring transport access does not automatically resolve the cost of producing the next shipment.

Manufacturers must assess whether achievable selling prices can cover production, handling and delivery costs before committing to sustained output.

Industry commentary reinforces the weak outlook

Kajaria Ceramics’ October earnings-call commentary offered a separate indication of conditions across the cluster.

Management estimated that 40–50% of Morbi plants were not operating and put the cluster’s potential full-year exports at approximately ₹12,000 crore. It identified freight and container costs among the factors affecting overseas business.

These are company-management estimates about the wider industry, rather than an official census of operating factories or final export statistics.

Nevertheless, they reinforce the distinction between shipments restarting and the manufacturing base recovering. A limited number of consignments can move while a substantial share of production capacity remains idle.

Export insurance support continues through March

The government has extended Component II of its RELIEF initiative until 31 March 2027 in response to continuing West Asian maritime disruption.

Under the Export Promotion Mission, the component encourages exporters to obtain ECGC protection for eligible shipments to specified regions, with 95% risk coverage.

Eligible policies obtained on or after 16 March 2026 receive protection against premium increases beyond pre-disruption levels during the applicable period.

The covered categories include full-container-load, less-than-container-load and reefer shipments, excluding energy cargo.

The measure addresses export-credit risk and insurance costs. It does not replace commercial arrangements for vessel space, freight pricing or delivery.

Recovery depends on commercially viable cargo flows

For Morbi’s exporters, shipment resumption is a necessary step towards rebuilding trade, but sustained recovery requires more than an available route.

Buyers need dependable delivery commitments, while manufacturers require workable production costs and access to suitable containers. Forwarders and transporters must coordinate factory dispatches, port cut-offs and sailing schedules around those requirements.

The commercial test will be whether repeat orders and regular shipments follow the initial restart.

For logistics providers serving the cluster, factory operating levels and confirmed export bookings will offer more useful planning signals than the reopening of a route alone. A durable recovery would combine rising production, reliable transport and orders that remain viable after freight, insurance and energy costs are included.

FAQs

Have Gulf shipments fully normalised?

No. The reported resumption is tentative, with production disruption continuing.

How many Morbi units remain closed?

The latest report indicates nearly 40%.

Is the projected 40% export decline confirmed?

No. It is a FY2026–27 forecast, not a final annual result.

What challenges remain?

Elevated freight and energy costs, container constraints and weak export conditions.

Until when has RELIEF support been extended?

Component II runs until 31 March 2027, subject to eligibility conditions.