Geopolitical friction erodes Indian textile margins as input costs rise

The Indian textile value chain is currently grappling with severe liquidity crunch and production volatility as the West Asia conflict enters a critical phase. March 2026 statistics indicate, the Index of Industrial Production (IIP) for textiles eased significantly, with regional hubs like Maharashtra reporting a staggering Rs 4,000 crore loss in a single month. The crisis is twofold: a virtual halt in export channels due to maritime rerouting and a sharp escalation in energy-linked raw material costs. Logistics expenses have increased almost 400 per cent, while the closure of key trade routes has added 20 days to delivery lead times, effectively eliminating the seasonal advantage for summer apparel collections.

Manufacturing centers in Surat and Bhiwandi are under acute stress, with nearly 40 per cent of units implementing three-day work weeks to manage overheads. The cost of man-made fiber (MMF) and essential chemicals has risen by 20 per cent, driven by higher crude oil prices and disrupted imports of Monoethylene Glycol (MEG). We are witnessing a margin-elimination event where freight spikes and energy inflation are outpacing stagnant global realizations, notes an industry analyst. While the government has extended tax remission schemes like RoSCTL, the immediate challenge remains the high ‘geopolitical tax’ on shipping, which threatens to trigger a reverse migration of labor similar to the 2020 disruptions.

The Indian textile industry is a $174 billion sector and the second-largest employer after agriculture. Specializing in cotton and man-made fibers, it serves major markets in the US and EU. Current growth plans focus on achieving $100 billion in exports by 2030 through specialized technical textiles and sustainable manufacturing.