Propane Import Duties Affects Morbi Ceramic Units

News: 1st July, 2023

The ceramics industry in Morbi is struggling as a result of the sharp increase in import taxes on propane gas. The central government has been urged in a letter by the ceramic factories, which use roughly 50 lakh SCM (standard cubic metres) of propane gas daily.

On July 1, a new 19.25% import charge on propane went into force. Previously, it was 2.75%. The dreams of ceramic units to obtain cheaper fuel have been shattered by this sharp hike in import duties because propane marketing businesses have raised their prices.

According to sources in the ceramics business, propane gas was Rs 3 per SCM cheaper in June than piped natural gas supplied by Gujarat Gas, and in July it was anticipated to be more than Rs 4 cheaper. But that didn't take place. Currently, there isn't much of a price difference between propane and piped natural gas: "There was a price differential of Rs 15 per SCM before one and a half years ago, and last month the difference was Rs 3. The price was supposed to decrease again this month, but instead it increased.  We have requested a reduction in the charge because this is unfair to our business, according to Mukesh Kundariya, president of the Morbi Ceramic Manufacturers Association's (MCMA) division for vitrified tiles. 

When the price of natural gas unexpectedly increased following the commencement of the Russia-Ukraine conflict in early 2022, the ceramic sector in Morbi had already begun transitioning to propane gas. 50 lakh SCM of the gas used by the sector each day, or 70 lakh SCM, is propane.

500 out of the 800 units currently use propane. Before the conflict began, there were reportedly 15 or so units using propane, according to industry sources. The propane-using appliances have made significant financial investments in the creation of gas storage tanks. Rough estimates place the price of constructing a tank at about Rs 70 lakh. Before using propane gas, the units had to secure the necessary regulatory approval. 

Despite the close price match between propane and piped natural gas, we will keep using propane because it has a higher calorific value (CV) than piped natural gas, which is only about 8,350. Accordingly, we can produce more while using less gas, according to Haresh Bopaliya, president of MCMA's wall tile business.