India can be a ceramics hub
Reforms are needed to enable the growth of ceramic industry in India, says Bhupendra Vyas
The ceramics industry in India is a high contributor to the Indian economy. Yet, despite being worth Rs8000 crore, the sector does not get its due recognition. Ceramics has been one of the most thriving sectors over the past few years with a CAGR of 15% per annum. The real estate boom of the mid 2000 widened the scope of the entire industry and increased per capita consumption.
But even now there is potential for immense growth of this sector based by demand across sectors like retail, IT & ITES and, of course, real estate. However, we do need to focus on making the sector competitive to unlock its revenue potential as an organised industry.
One of the most important steps in this direction is the rationalisation of the custom duties on finished goods and raw material. Even today, the custom duty on finished goods from China is lower as compared to the duty on raw material. This acts as a major deterrent to the manufacturing of ceramics and vitrified tiles in India, since distributors and dealers can offer the Chinese products at a cheaper rate to the end consumer.
Also, we need to make India an attractive manufacturing destination internationally. We need to offer incentives in the form of lower tax structures and ease of operation. The measures towards this should also include reduction of import/custom duties on raw materials in-line with other countries in the SAARC region.
As a global manufacturer, RAK Ceramics exports close to 8-10% of its production annually. As an exporter of goods from India one is entitled to export incentives. However, the process of claiming the incentive and credit is currently very lengthy and tedious. We need to make the procedure for claiming export incentive simplified, and credit should be made available against the proof of export without waiting for realisation of export LC Values.
We need to encourage the consumer to purchase quality branded products which they can trust; products offering more than just mere looks. Unfortunately, according to our prevalent tax structures vitrified tiles are still classified as a luxury item. In today’s environment they have become a staple requirement for most new complexes in metros and tier-1 towns. To enable a larger set of consumers to access the product, vitrified tiles should now be classified as a basic item according to the tax structure, thereby reducing the price of the product.
The government can also consider providing subsidies on all material supplies for projects undertaken for state government housing boards and redevelopment authorities. Lastly, we need to rationalise the tax structures across the organised and unorganised sector to create a level playing between the organised and unorganised sector.
The ceramics industry in India has been growing at a healthy rate over the last few years. To herald the next stage of growth for the industry, various stakeholders need to be committed to introducing periodic reforms and incentives. We have the potential to make India a global manufacturing hub for ceramics, the most important requirement now is a push in the right direction.
Bhupendra Vyas is President, RAK Ceramics India