India’s textile and apparel industry, valued at approximately $174 billion, is facing mounting pressure as geopolitical tensions in West Asia continue to disrupt global trade dynamics, triggering cost inflation, supply chain instability, and weakening demand across key export markets.
The ongoing conflict involving the United States, Israel, and Iran has already begun to impact multiple layers of the textile value chain. Industry stakeholders warn that the situation could escalate into a “major crisis” as early as April, with financial stress, production slowdowns, and labour challenges converging simultaneously.
Cost Surge and Demand Uncertainty Hit Industry Core
According to industry leaders, the sector is currently operating on previously secured orders, which helped maintain cash flow in March. However, the outlook for April appears significantly weaker, with expectations of declining demand and delayed payments.
Ashish Gujarati, former President of the Southern Gujarat Chamber of Commerce and Industry, noted that the industry may soon face a sharp contraction driven by a combination of demand gaps, payment delays, and workforce migration, echoing disruptions seen during the COVID-19 pandemic.
Surat Cluster Sees Sharp Production Cuts
The impact is already visible in Surat, widely known as India’s “Silk City” and a major hub for synthetic textiles. The region accounts for nearly 40% of India’s synthetic fabric production, supported by more than 400 processing units.
Read more: Iran’s Textile Industry Under Pressure: War, Uncertainty, and the Fragility of Production Chains
Over the past month, production levels in the Surat cluster have declined by approximately 40%, with manufacturers opting for voluntary cuts in response to rising costs and reduced market visibility.
Tiruppur Faces Escalating Operational Pressures
The southern textile hub of Tiruppur, often referred to as the “Knitwear Capital of India,” is also experiencing significant strain. Exporters in the region report sharp increases in operational costs, driven primarily by logistics and energy price volatility.
Industry estimates suggest:
- Logistics costs have surged by up to 400%
- Coal prices have increased by up to 80%
- Chemicals and man-made fibre (MMF) costs have risen by around 20%
In addition to financial pressures, labour welfare has emerged as a critical concern. Approximately 400,000 workers in Tiruppur rely on hostel facilities that depend heavily on commercial LPG. Rising fuel costs could disrupt basic living conditions, potentially accelerating labour migration and further affecting production capacity.
Competitive Disadvantage in Global Markets
The crisis is also exposing structural weaknesses in India’s export competitiveness. Compared to major competitors such as China, Bangladesh, and Vietnam, India continues to face significantly longer shipping times.
While shipments from China to the United States typically take 15–20 days, Indian exports can take 45–70 days, increasing inventory costs for global buyers and reducing sourcing attractiveness.
Industry Calls for Immediate Policy Support
Industry associations are urging the government to introduce urgent support measures to stabilize the sector. Key recommendations include:
- Deferment of loan repayments
- Restructuring of stressed financial accounts
- Expansion of working capital limits
- Reduction of interest rates
At the same time, exporters warn that rising freight rates and input costs are compressing margins, complicating operational planning across the value chain.
Long-Term Outlook Hinges on Diversification
Despite the immediate challenges, industry experts maintain a cautiously optimistic long-term outlook. Market diversification, particularly through new Free Trade Agreements (FTAs), is seen as a key strategy for reducing dependency on volatile regions.
Expanding into domestic markets and strengthening capabilities in technical textiles are also identified as critical growth drivers.
With India targeting $100 billion in textile exports by 2030, the current crisis highlights the urgency of addressing structural inefficiencies while building resilience against geopolitical shocks.
A Critical Moment for the Industry
The coming months are expected to be decisive. While the industry has demonstrated resilience in past disruptions, the combination of geopolitical conflict, cost inflation, and structural challenges presents a more complex scenario.
For now, the immediate priority remains clear: stabilize operations, protect the workforce, and maintain export continuity until global conditions improve.
