Polyester under pressure as India’s textile sector deals with Hormuz led supply shock

A quiet war is making a loud impact on the Indian textile market. Since the escalation of the US-Israel-Iran conflict in late February 2026, the effective closure of the Strait of Hormuz by Iranian forces has evolved from an energy crisis into a full-blown raw material emergency. With roughly 20 per cent of global oil and a staggering 42 per cent of global Polypropylene (PP) exports originating from the Gulf, the disruption has severed the primary artery for synthetic feedstocks. Indian manufacturers, heavily reliant on Middle Eastern Naphtha and Paraxylene (PX), are now facing a volatile procurement scenario where spot offers are being withdrawn and contract commitments are being tested by force majeure declarations.

Price volatility hits the loom as feedstock reserves dwindle

The impact on the polyester chain, the backbone of Indian mass-market apparel has been immediate. In the first two weeks of March 2026, the price of 1.2 denier polyester staple fibre (PSF) jumped by Rs 12 per kg, reaching approximately Rs 114.25 per kg. This increase  is driven by the soaring costs of Purified Terephthalic Acid (PTA), which rose by Rs 20.48 per kg in a single trading session. Major domestic producers, including Reliance Industries (RIL) and Haldia Petrochemicals, have announced multiple price hikes to offset the rising cost of imported Naphtha, which has breached the $800/MT mark.

Table: Polyester price volatility

Route re-routing and the Cape of Good Hope premium

Beyond the factory gate, a secondary cost layer is emerging: the freight risk premium. With the Strait of Hormuz compromised, cargo vessels are bypassing the Gulf and rerouting around the Cape of Good Hope. This shift adds 20 to 25 days to transit times, a critical blow for fashion-sensitive shipments from hubs like Tiruppur. Freight surcharges have increased, with some carriers introducing emergency conflict fees of up to $4,000 per container. Exporters now face a double bind: rising production costs and the threat of order cancellations from European brands due to missed seasonal delivery windows.

The domestic squeeze

The crisis has forced the Indian government to intervene at the source. On March 9, 2026, the Ministry of Petroleum and Natural Gas invoked the Essential Commodities Act to divert gas supply away from non-priority sectors. Petrochemical facilities, including ONGC Petro additions Ltd (OPaL) and GAIL’s Pata complex, have seen gas allocations reduced to prioritize domestic PNG and CNG needs. This internal shift is further tightening the availability of polymers. As a result, technical textile players sourcing PP-based nonwovens for hygiene and medical products are witnessing a ‘supply desert’, where even local procurement is subject to rationing.

India as the alternative supply hub

Despite the immediate pressure, the crisis is leading to change with the China Plus One strategy is expanding into a Feedstock Plus One conversation. International brands are looking at India as a potential alternative for man-made fibre (MMF) supply to reduce over-reliance on single-region hubs.

The Production Linked Incentive (PLI) Scheme is now the industry's primary defensive tool, with over Rs 10,700 crore in committed investments focused on high-performance fabrics. This is the moment for Indian manufacturers to shift from being simple garment assemblers to integrated material science partners, offering global buyers long-term feedstock resilience.

Dealing with the synthetic shift

India’s textile industry is a global powerhouse currently riding the $1.2 billion PLI framework to dominate the MMF and technical textiles space. While the sector aims for a $100 billion export target by 2030, current performance is highly sensitive to Middle Eastern crude and naphtha pricing. Historically cotton-dependent, India’s recent aggressive growth in high-performance synthetic fabrics marks its most significant transformation since the post-quota era of the early 2000s.