Indian Ceramic Tile Makers Wary Of US Anti-Dumping Duty Hitting Exports

The Tile Council of North America has stated that 90% of ceramic tile manufacturers in the US have submitted an anti-dumping petition to the federal government on April 19. The purpose of this petition is to request significant tariffs on ceramic tile imports from India.

The potential imposition of tariffs on Indian ceramic tile imports to the US may affect the per-square-foot prices of tiles, potentially rendering it impractical to export for Indian manufacturers.

India ranks second globally in both tile production and consumption, with an estimated market size of Rs 58,000 crore as of FY23.

India's average production and consumption of 2,500 million square metres and 2,070 million square metres are equivalent to 14% and 11% of the world's, respectively, according to Emkay Global Financial Services Ltd.

In recent years, India's position in the global tile industry has notably strengthened due to the adoption of technology, cost-effective labour, and abundant raw materials. Furthermore, several countries have imposed anti-dumping duties on Chinese products, providing additional support to the Indian tile industry.

Exports contribute to about 28% of the Indian tile industry's revenue in FY23, according to Emkay Global Financial Services. China's loss has been India's gain in the export market, with India's share in overall trade inching up by 500 basis points to 15% since 2018, Ceramic World Review data showed.

India’s overall tile exports have grown by more than 10 times over the last decade to 461 million square metres in FY23, Emkay Global said.

While most of India's ceramic tile export destinations have been in the middle eastern regions, the US share has significantly increased.

The US' share in India's total tile export mix increased to 8% in the first 10 months of FY24 from a 0.7% in FY18, according to Prabhudas Lilladher. India's ceramic tile exports to the US have surged from 3.44 lakh square feet in 2013 to 40.5 crore square feet, growing at a 10-year compounded annual growth rate of 103%, the brokerage said.

The US ceramic tile market has been heavily import-dependent, with imports contributing an average of about 70% of the country's total ceramic tile consumption in the past decade, said Prabhudas Lilladher. This indicates that the US ceramic tile manufacturers filling out the petition account for over 90% of domestic production but only 30% of domestic consumption.

According to the brokerage, in 2021–2022, India contributed to 11% of the US' total ceramic tile imports. This share now stands at around 20% from October 2023 until March 2024.

The Tile Council of North America announced that the anti-dumping and countervailing duty petition by US ceramic tile manufacturers aims to impose significant tariffs on ceramic tile imports from India in order to address "unfairly low-priced" imports that have harmed domestic manufacturers.

As per the TCNA press release, the anti-dumping petition from the industry proposes tariffs ranging from 408% to 828%. Furthermore, the countervailing duty petition seeks to impose extra tariffs to address the effects of subsidies provided by the Indian government.

TCNA Executive Director Eric Astrachan stated that while American tile manufacturers have always welcomed fair competition from imports, the government subsidies enjoyed by Indian tile producers—which, in conjunction with selling excess capacity at dumped prices—have allowed them to flood the US market.

India has remained the most competitive with respect to export realisations, according to Ceramic World Review data.

India's import realisations in the US stood at $0.63 per square feet or Rs 568 per square metre, said Prabhudas Lilladher. This is the lowest among major importing countries, which usually average a realisation of $1.3 per square feet.

According to the petition filled, the proposed tariffs vary between 408% and 828%. If the US government does impose anti-dumping duties on ceramic tiles imported from India, the expected realisation would range between $2.5 and $5.1 per square feet or Rs 2,271 and 4,550 per square metre, according to Prabhudas Lilladher.

High tariffs would raise costs, rendering Indian tile exports more expensive for US buyers. Additionally, countries like Italy, Spain, Brazil, Mexico, and China have set up production sites in the USA to bolster global competition, including against Indian imports.

Increased prices may deter US importers from purchasing Indian tiles. This would lead to a decline in exports, thereby affecting the topline of Indian players.

Within the listed space, Asian Granito India Ltd. has the highest export share at 12.9%.

While most of the major listed players have lower exposure to export risk, the potential glut of tiles in the Indian market due to possible lower exports can also drive down domestic prices.

This could thereby reduce sales revenue and also pose a risk to the domestic margins of Indian ceramic tile producers viz. Somany Ceramics Ltd., Orient Bell Ltd., Asian Granito India Ltd., Kajaria Ceramics Ltd., and Exxaro Tiles Ltd.