West Asia Conflict Drives Input Cost Surge for Gujarat's Textile and Chemical Industries
The ongoing West Asia conflict is severely impacting Gujarat's textile and chemical industries, leading to significant input cost surges and supply disruptions. Gas companies have curtailed supplies to chemical clusters, forcing production cuts and a 30-40% price hike in basic chemicals. Textile processors face increased colour chemical and fuel costs, revising job-work rates. In Surat, rising crude oil prices have pushed up yarn costs, threatening production halts, with calls for government intervention against potential cartelization by yarn producers.
Industrial units in Gujarat's key textile and chemical clusters are grappling with escalating production costs and supply chain disruptions due to the ongoing Israel-Iran conflict. Manufacturers in Ahmedabad's chemical sector report that gas companies have reduced supplies to about 40% of normal requirements, compelling factories to scale back production. This curtailment has led to a sharp 30-40% increase in prices of basic chemicals and intermediates within two weeks. Textile processors are also affected, as the cost of colour chemicals for dyeing and finishing has risen, leading several units in Ahmedabad to revise job-work rates for new orders. Furthermore, processing houses in the Narol cluster face higher fuel costs, with imported coal and lignite prices contributing significantly to their expenses. The impact extends to Surat, a major hub for man-made fibre textiles, where a sharp rise in crude oil prices, from US $73 to nearly US $100, has caused a rapid increase in yarn costs and disrupted immediate supply. Spinners have increased polyester yarn prices by Rs. 20 (US $0.22) per kilogram and nylon yarn prices by Rs. 25-Rs. 30 (US $0.27-US $0.33) per kilogram. Some spinners are now linking yarn prices directly to crude oil rates and demanding immediate payments, increasing the working capital burden for weavers who typically operate on 30-day credit. Industry representatives have warned that weavers might be forced to reduce or halt production if operating conditions become financially unviable, urging government intervention and considering a complaint to the Competition Commission of India against alleged cartelization by yarn producers.
