Why a Trade Deal With Europe Matters to a Morbi Tile Factory

Morbi makes most of India’s ceramic tiles. The India–EU agreement could change who buys them, and how a town of kilns plans its next decade.

Two decades of talks, one announcement

On January 27, India and the European Union concluded a free trade agreement after nearly two decades of on-and-off negotiation. Under it, most Indian goods will enter the EU with low or zero duties, and India will gradually cut its own tariffs on European cars, wine, machinery and food products. The EU is a market of around 45 crore relatively wealthy consumers, and until now Indian exporters have competed there at a disadvantage against countries that already had deals.

Most coverage focused on cheaper European cars and whisky in India. Those are real, but they matter to a small number of buyers. The bigger story is in places like Morbi, a town in Saurashtra that produces the large majority of India’s ceramic tiles and has spent the last few years trying to sell more of them abroad.

Why tariffs of a few percent matter

Tiles are heavy, cheap to make and expensive to ship. The profit on each box is small, so a duty of even a few percent at the border can decide whether an Indian tile beats a Turkish or Spanish one in a European warehouse. Morbi already sells to the Gulf, Africa and parts of Asia, but Europe has been harder to crack. A deal that removes duties gives exporters a reason to invest in European certifications, designs and distributors.

There is a second effect. Last year’s 50% American tariff showed how risky it is to depend on a single large buyer. A factory that sells to twenty countries can survive one of them turning hostile. Trade economists call this diversification, and for Morbi it is not abstract. It is the difference between running kilns at full capacity and shutting some down.

What still has to happen

A concluded deal is not yet a working deal. The text has to be legally checked, translated and approved by the European Parliament and member states, which can take a year or more. Europe’s carbon border tax currently covers steel, aluminium and cement rather than tiles, but European buyers increasingly ask suppliers about emissions, and Morbi’s gas-fired kilns may need cleaner fuel to take full advantage.

Still, my father’s friend who runs a mid-sized unit said something that stayed with me. He said the deal will not double his business, but it gives him a reason to plan for five years instead of five months. That is what good trade policy should do. It does not guarantee profits. It reduces the uncertainty that stops small firms from investing in the first place.