Morbi, Gujarat’s ceramic manufacturing hub that accounts for 80–90% of India’s production, is facing a severe fuel crisis triggered by the US–Iran conflict.
Morbi in Gujarat, which accounts for 80–90 per cent of India’s ceramic production, is staring at an unprecedented fuel crisis triggered by the US–Iran conflict, with around 300-odd units operating on propane expected to begin shutting operations from Wednesday night or Thursday as propane supplies dry up and natural gas allocations are cut.
“If the propane supply stops then 70 percent of the units in Morbi are expected to shut operations. These units are expected to start shutting down from Wednesday night or Thursday as no new supply is expected anytime soon,” said Manoj Arvadiya, President (Vitrified Tiles Division), Morbi Ceramic Manufacturers Association, speaking to businessline over the phone from Morbi.
₹1,000 crore industry
At stake is an industry that produces nearly Rs 1,000 crore worth of ceramics every month.
“Our daily consumption of propane is 5500 tonnes and the suppliers maintain their stocks accordingly. After the war started, there is a situation of short supply. If no new supply vessels arrive at the port in a day or two and if the government does not arrange for any alternate sources then the 300-odd units will be forced to shut operations. Individual ceramic units have propane stocks that can last only a day or two as we do have large storage capacities,” Arvadiya added.
Energy mix breakdown
Nearly 70 per cent of Morbi’s ceramic units run on propane, making the cluster heavily dependent on imported fuel. The ecosystem runs on a delicate energy mix of propane and piped natural gas (PNG). Of the 900-odd ceramic units in the cluster, 530 units have the infrastructure to use either PNG or propane, while another 370 units can operate only on PNG. The total fuel consumption in Morbi — in gas equivalent terms — stands at 7 to 7.5 million metric standard cubic metres per day (mmscmd). Of this, roughly one-third is natural gas, and two-thirds is propane. The total propane market is close to 1.67 lakh tonnes per month. The dependence on propane is significant. Daily consumption alone is about 5,500 tonnes. And now, that lifeline is drying up.
PNG supply cut
The fallback option — natural gas — is also under pressure. Gujarat Gas Ltd, one of the largest City Gas Distribution (CGD) companies in India, providing Piped Natural Gas (PNG) to over 4,430 industrial customers, has curtailed supply to Morbi units by 50 per cent in March under Minimum Guaranteed Offtake (MGO) contracts. In FY 2024-25, Gujarat Gas sold on average 9.62 MMSCMD of natural gas, of which 5.03 MMSCMD comprised industrial PNG volumes, a significant portion of which was sold in Morbi.
Force majeure invoked
But with propane supplies nearly halted and PNG allocations cut, even dual-fuel units are left scrambling. “The supply of propane has almost stopped. The companies like IOC, BPCL, Aegis that have been supplying the fuel told us that they have run out of stocks. Some of us have the option of using natural gas supplied by Gujarat Gas, but they have declared a 50 percent cut for the month of March in the MGO (Minimum Guaranteed Offtake) contracts entered into by individual companies. Some of those operating on propane have already begun shutting down,” said Mukesh Kundariya of Segam Tiles Pvt Ltd and former president of Morbi Ceramic Manufacturers Association, In City Gas Distribution contracts — such as those signed by industrial units with Gujarat Gas Ltd — an MGO clause requires the customer to commit to lifting (offtaking) a minimum volume of gas over a specified period.
The crisis has deepened with Gujarat Gas invoking force majeure, according to industry sources. State-government entity Gujarat Gas has not only restricted the daily contract quantity for industrial customers by 50 per cent, with effect from March 6, but has also warned industries that, in case of consumption exceeding the total quantity, gas supply will be immediately cut. On Wednesday evening, the company, in a regulatory filing, declared force majeure on industrial gas supplies after strains on imported LNG caused by the ongoing war in the Middle East disrupted the fuel supply chain.
Ceramic hub under threat
“We are in a lot of trouble. Gujarat Gas has evoked force majeure,” said Nilesh Jetpariya, another ceramic manufacturer. Morbi is not just another industrial town. It is India’s ceramic powerhouse, supplying vitrified tiles, sanitaryware and other ceramic products across domestic and export markets. A shutdown of even 50–70 per cent of its units could ripple through construction supply chains, real estate projects and export commitments, said industry sources.
Published on March 4, 2026