US tariff impact: Indian quartz stone exporters seek government relief

Hyderabad: With the United States implementing a 50 per cent tariff on Indian quartz stone exports from August 27, the domestic engineering quartz industry is urgently seeking comprehensive government intervention to prevent financial collapse while exploring alternative markets.

India's engineering quartz sector, which has invested approximately Rs 5,000 crore with additional investments underway, faces an existential crisis as the tariff effectively eliminates its competitiveness in the US market which accounts for 95 per cent of the industry's production.

The Federation of Quartz Surface Manufacturers of India (FQSMI) has submitted a comprehensive relief proposal to the Prime Minister, seeking immediate government intervention across multiple fronts.

The industry's primary demands include a three-year moratorium on term loan installment repayments, interest payments on term loans, and working capital facilities, coupled with immediate implementation of a 50 per cent interest rate subvention. Additionally, manufacturers are advocating for a reduction in GST on quartz surface products from the current 18 per cent to 5 per cent to enhance domestic competitiveness.

"We have sought a three-year extension for PCFC closure and export bill realization norms, along with exemption for EOU and SEZ units from customs duty on domestic tariff area sales, since the industry uses no imported raw materials or consumables," said FQSMI founder president Govindaraju Krishna Rao who wrote to the Prime Minister, Narendra Modi.

The industry has also requested permission to utilize 25 per cent of existing working capital limits without additional security to develop new export markets and weather the current crisis. Other demands include import restrictions on marble and stone products to boost domestic demand and a Rs 500 crore allocation for new market development initiatives.

The Indian quartz surfaces manufacturing industry, barely a decade old and still in its nascent stage, produces artificial manmade slabs using 100 per cent indigenous raw materials through highly labor-intensive processes. These products are primarily used for kitchen countertops, flooring, and cladding applications.

Over the past ten years, manufacturers have invested heavily in establishing state-of-the-art facilities with cutting-edge technology, training specialized workforce, and spending millions developing new colors and cultivating the US market the world's largest importer of quartz surface products.

Through sustained effort and investment totaling millions of dollars, India emerged as the largest quartz surface exporter to the United States, surpassing established competitors including Vietnam, several East Asian countries, and Europe. The industry currently comprises over 50 manufacturing units, predominantly established as EOU/SEZ facilities across Gujarat, Rajasthan, Karnataka, Telangana, and Andhra Pradesh.

The sector's combined annual capacity exceeds 10 million square meters, supported by investments of over Rs 5,000 crore in plant establishment, with an additional Rs 1,000 crore expansion at various implementation stages. Banks have extended approximately Rs 4,000 crore in term loans and working capital financing to support this growth.

"With 95 per cent of production exported to the USA, our exports for 2024-25 are valued at over $700 million (approximately Rs 6,000 crore)," Krishna Rao said.

The unprecedented 50 per cent tariff has created a 30-31 per cent tariff disadvantage compared to major competing countries including Vietnam, Thailand, and Europe a gap industry experts describe as impossible to bridge. This disparity has effectively eliminated Indian quartz manufacturers from the US market.

"All efforts invested over the past decade to become America's largest quartz surface supplier have been nullified. Exports have ground to a halt, confirmed orders are being cancelled due to tariff uncertainty, and already-produced goods remain unshipped, causing enormous financial losses," ," Krishna Rao added.

The industry's collective bank exposure of over Rs 4,000 crore now faces severe stress, with manufacturers unable to service loans or ensure timely repayment under current circumstances.

Industry leaders acknowledge that developing alternative export markets will require considerable time, as quartz surface technology remains relatively new globally. The challenge is compounded by intense price competition from China, which redirected its production to these markets after facing 150 per cent anti-dumping duties imposed by the United States in 2018.

"Without immediate government intervention, this promising industry risks collapse at a critical growth stage, potentially rendering thousands of jobs and billions in investments unviable," Krishna Rao said.