How the Iran war is bleeding Surat's textile industry of Rs 100 crore a day
With 20% to 400% increase in input costs and flight of migrant labour to villages due to black marketing of domestic LPG, the industry has clocked a loss of Rs 5,000 crore in the last three weeks and claims the pace of loss is only accelerating
“Each day the war continues, Surat is clocking a loss of at least Rs 100 crore per day now,” asserts Jirawala. The industry faces a sharp spike in input costs of materials it imports from West Asian countries. Polyester and nylon yarn prices have shot up by 40%, while grey fabric cost has increased by Rs 3-5 per metre. The most severe jumps are in processing and logistics. Input costs of dyes and chemicals have surged 20% to 60%, industrial coal is up 35%, and shipping freight has skyrocketed by 400%. Locally, even transportation costs for a single truckload have risen from Rs 400 to over Rs 600, creating a massive financial burden across the entire production chain. “We have to reduce production. Our products are absolutely unsustainable and uncompetitive at such increased costs,” Jirawala says.
The industry is truly stuck between the rock and a hard place. Though towering enough, supply of raw material is not the primary concern for the industry. The near irreversible loss is that of trained manpower –– migrant labourers who are returning home in hordes now. At least over a lakh trained manpower, mostly migrant labourers from Bihar, Uttar Pradesh, Uttarakhand and Odisha, have left in the past few days –– not because processing units have stopped work but because there is a shortage of LPG cylinders for domestic use. This shortage, Jirawala clarified, was created because of the wide scale black marketing of domestic cylinders for commercial use. “We have repeatedly requested the government to supply the workers’ colonies with at least 5 kg cylinders so that worker families continue to stay. If workers leave, getting them to return takes months, as we saw during the Covid pandemic,” he says.
“Our workforce is the life and breath of our units. Without them, we cannot function,” says Jirawala. “The industry was already operating at a 15% labour shortage. Another 20% have returned home over the last three weeks.” He adds that the city is currently looking at a massive 35% labour shortage, and rising rapidly every day.
Textile entrepreneurs claim it takes them six months to a year to train a worker for the specific task of how to operate sophisticated machines. “Once they return to their home villages, the state governments and local industry like to retain the trained manpower. With the incentive of staying close to family, these migrant workers settle
for lower pays and stay back,” explains Dinesh Dhankani, proprietor of Liberty Silk Mills in Sachin GIDC. “For us, that means losing a precious year of manpower, trained at our expense. We start from scratch again and again, with no guarantee that the trained staff will even complete the season.”
The Southern Gujarat Chamber of Commerce and Industry is hopeful of the war ending soon and the supply constraints getting back on track. But the MSME units in Surat face this unique challenge of having to shut down their machines because of an inadequate labour force. Shut machines accrue high maintenance costs. Nikhil Madrasi, president of SGCCI, dismisses reports of widescale closure of units, saying it is not wise for them to shut down entirely, but admitted that a majority had indeed reduced operational days in a week and working hours and cut down on shifts. “The majority of the 25,000 units in and around Surat are MSMEs, operating on wafer thin margins and are more vulnerable to fluctuations. If the war stretches for more than a few weeks now, there will be a major disruption,” cautions Madrasi.
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“Each day the war continues, Surat is clocking a loss of at least Rs 100 crore per day now,” asserts Jirawala. The industry faces a sharp spike in input costs of materials it imports from West Asian countries. Polyester and nylon yarn prices have shot up by 40%, while grey fabric cost has increased by Rs 3-5 per metre. The most severe jumps are in processing and logistics. Input costs of dyes and chemicals have surged 20% to 60%, industrial coal is up 35%, and shipping freight has skyrocketed by 400%. Locally, even transportation costs for a single truckload have risen from Rs 400 to over Rs 600, creating a massive financial burden across the entire production chain. “We have to reduce production. Our products are absolutely unsustainable and uncompetitive at such increased costs,” Jirawala says.
The industry is truly stuck between the rock and a hard place. Though towering enough, supply of raw material is not the primary concern for the industry. The near irreversible loss is that of trained manpower –– migrant labourers who are returning home in hordes now. At least over a lakh trained manpower, mostly migrant labourers from Bihar, Uttar Pradesh, Uttarakhand and Odisha, have left in the past few days –– not because processing units have stopped work but because there is a shortage of LPG cylinders for domestic use. This shortage, Jirawala clarified, was created because of the wide scale black marketing of domestic cylinders for commercial use. “We have repeatedly requested the government to supply the workers’ colonies with at least 5 kg cylinders so that worker families continue to stay. If workers leave, getting them to return takes months, as we saw during the Covid pandemic,” he says.
“Our workforce is the life and breath of our units. Without them, we cannot function,” says Jirawala. “The industry was already operating at a 15% labour shortage. Another 20% have returned home over the last three weeks.” He adds that the city is currently looking at a massive 35% labour shortage, and rising rapidly every day.
Textile entrepreneurs claim it takes them six months to a year to train a worker for the specific task of how to operate sophisticated machines. “Once they return to their home villages, the state governments and local industry like to retain the trained manpower. With the incentive of staying close to family, these migrant workers settle
for lower pays and stay back,” explains Dinesh Dhankani, proprietor of Liberty Silk Mills in Sachin GIDC. “For us, that means losing a precious year of manpower, trained at our expense. We start from scratch again and again, with no guarantee that the trained staff will even complete the season.”
The Southern Gujarat Chamber of Commerce and Industry is hopeful of the war ending soon and the supply constraints getting back on track. But the MSME units in Surat face this unique challenge of having to shut down their machines because of an inadequate labour force. Shut machines accrue high maintenance costs. Nikhil Madrasi, president of SGCCI, dismisses reports of widescale closure of units, saying it is not wise for them to shut down entirely, but admitted that a majority had indeed reduced operational days in a week and working hours and cut down on shifts. “The majority of the 25,000 units in and around Surat are MSMEs, operating on wafer thin margins and are more vulnerable to fluctuations. If the war stretches for more than a few weeks now, there will be a major disruption,” cautions Madrasi.
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