Rising Costs and Global Headwinds Strain Gujarat’s Textile Industry

Rising costs and global challenges are putting pressure on Gujarat's textile industry.

Gujarat's textile industry—widely considered the backbone of India's man-made fiber (MMF) sector—is facing one of the most severe financial downturns in its recent history, with Surat, the textile hub of South Gujarat, at the epicenter of the crisis.

A combination of geopolitical tensions in West Asia, rising crude oil prices, increasing yarn costs, declining global demand, and increasing trade pressures have pushed the sector into a deep crisis. According to industry estimates, losses of approximately ₹2,500-₹3,000 crore have been incurred in the last 60 days, and many weaving units are now operating at only about half their installed capacity.

Surat, one of India's largest textile production centers, is currently facing a "severe crisis" of "increased costs and weak market demand," as described by industry stakeholders. What began as an external shock linked to geopolitical instability has rapidly transformed into a structural strain on the region's textile economy, severely impacting the profits of manufacturers, traders, and related workers.

At the root of this crisis is the sharp rise in crude oil prices, which has directly impacted the MMF value chain. Since most synthetic textile production relies heavily on petroleum-derived raw materials, high crude oil rates have significantly increased yarn prices. Despite the significant increase in input costs, market fabric prices have not adjusted proportionately, leading to a widening gap between production costs and realization.