Indian tiles shine in the US — capturing Chinese market share

India now ranks among the top five countries from where the US imported the most tiles by volume and value. Spain, Italy, Mexico and Turkey are the only countries that export more tiles to the US.

The North American ceramic tiles market size, valued at $20.4 billion in 2020, is likely to grow at a compounded annual growth rate (CAGR) of 5.3 percent to $30.67 billion by 2028, according to Grandview Research.

2019 was a year in which the US economy experienced its 10th straight year of economic expansion post the global financial crisis. In the same year, the country's ceramic tile market declined for the first time in a decade, even before the pandemic hit. Until then, China was the largest exporter of ceramic tiles to the US by volume. That trend was about to change.

Even as the country remained the largest ceramic tile exporter to the US, that number fell dramatically. "This was primarily due to the effects of a trade remedy case filed by a coalition of several US manufacturers, which petitioned the federal government to remedy unfairly dumped and subsidised ceramic tile imports from China," the Tile Council of North America wrote in its statement.

By the first quarter of 2020, as the trade war between the two countries intensified, China not only dropped out from the top five exporters of ceramic tiles to the US, but its share slipped to near-negligible levels.

India is the world's second-largest manufacturer of tiles. Despite the distinction, it somehow never made it to the list of top exporters to the US, even after exporting to over 125 countries, including Saudi Arabia, Mexico, and Kuwait.

India first featured among the top five countries from which the US imports ceramic tiles in the January-March 2021 period. On a year-on-year basis, India's exports of ceramics to the US nearly doubled between January-March 2020 & January-March 2021.

India now exports most ceramic products to the US in monetary terms. Exports of ceramics and glassware products hit a record $3.5 billion in FY22.

"India's export market has become very competitive. And you will be happy to know that the biggest market for India today is the USA," Ashok Kajaria of Kajaria Ceramics told CNBC TV18 in an interview last week. Kajaria also added that exports for the first three months of FY23 have been to the tune of Rs 4,000 crore.

For the second quarter of 2022, India remains among the top five countries from where the US imports ceramic products.

However, India has registered the highest growth among the top five countries compared to the second quarter of 2021 at 4.4 percent.

In US dollar terms, US imports from India increased 22.3 percent from last year, only second to Spain. The value of ceramic products imported from India has crossed $100 million so far this year.

Over 90 percent of the ceramics produced in India come from Morbi in Gujarat. Brokerage firm Jefferies believes that Morbi exports will likely rise to 50 percent of overall production over the next three years from the current levels of 35 percent, aided by the energy crisis in Europe and Russian exports.

"Morbi hiked tile prices by 20 percent in FY22, and a further 5 percent could be required," the note said. Many plants have also migrated to Propane due to elevated gas costs.

"Higher export focus by Morbi players could ease operations in the domestic market, sustaining pricing stability," Jefferies wrote in its note. The firm expects the company's operating margins to expand by 80 basis points over FY22-25, aided by optimising product mix and better volume traction.