Consider this: A third of the 15-lakh workforce employed in the textile belt of Surat in Gujarat have returned home since the start of the Iran war as export orders shrink, fuel bills rise and factories cut shifts to account for lower output.
The situation is no different in Bhiwandi, Maharashtra, home to 35% of the country’s power looms, where several business owners are struggling to sustain operations amid surging raw material prices and dwindling workforce availability since the West Asia conflict began.
Morbi’s factory owners in Gujarat say the sharp rise in gas prices and erratic LPG supplies after the escalation of the Iran conflict have turned production economics upside down. An estimated 2-4 lakh workers in Morbi, India’s ceramics capital, are facing salary cuts, idle days, or outright job losses, trade experts said. While some units are opening up gradually, it may take months for the situation to normalise at Morbi, experts added.
From Looms to Kilns
Across India’s industrial belts, the West Asia war is no longer a temporary trade disruption linked to a distant geopolitical conflict. For thousands of micro, small and medium enterprises (MSMEs), the prolonged Iran war, which is into its third month, is turning into a survival crisis—one that is freezing production lines, choking exports and triggering fresh waves of job losses across some of India’s largest manufacturing clusters.
ECLGS 5.0 Lifeline
Earlier this month, the government approved an over Rs 2.5 lakh crore loan facility, backstopped by the Centre, to help businesses including MSMEs and airlines to deal with the impact of the West Asia crisis by providing additional funding. Using the Covid-era playbook, the cabinet also approved Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to provide credit guarantee coverage of 100% for MSMEs and 90% for other companies.
But on factory floors from Morbi to Tirupur, Ludhiana to Firozabad, many entrepreneurs say the immediate concern is to keep machines running long enough to survive the next few months.
“The summer season is a time when migrant workers head home annually. But this year, the trend began as early as March as loom owners in Surat cut production shifts and work hours owing to the Iran war,” Sharad Zagade, general secretary of Gujarat Sangarsh Mazdoor Union, told FE.
Engineering units in Rajkot, heavily dependent on imported metals and export shipments, are facing delayed consignments and rising freight bills that buyers are unwilling to absorb. “Production is below capacity as exports have been hit. Unit owners are not stopping workers from leaving. There is simply not enough work,” Narendra Panchani, president of Rajkot Engineering Association, said.
“We run a small powerloom in Bhiwandi, employing about 60 people. In the last three months, more than half have left for their villages. I plan to let go of more people,” Miraj Ansari, proprietor of AK Enterprises, a powerloom owner said, citing difficulty in running his business owing to escalating costs.
In Ahmedabad, detergent manufacturers are struggling with the rising cost of petrochemical derivatives used in soaps and cleaning products. According to Niraj Vyas, a member of the Gujarat Small Scale Detergent Manufacturers Association, production is down by nearly 70% in the detergent sector dominated by MSMEs. Industry estimates reveal that over 25,000 people have been rendered jobless.
Tirupur’s knitwear exporters are seeing container costs jump as shipping routes through West Asia become volatile. Leather clusters in Uttar Pradesh, already under pressure from weak global demand, are reporting order cancellations and delayed payments from overseas clients. Sports goods makers in Ludhiana say rising logistics costs are making Indian products less competitive in export markets. Glass manufacturing units in Firozabad and Noida, among the most energy-intensive MSME industries, are staring at mounting losses as gas availability tightens.
Industry bodies warn that unlike large corporations, many MSMEs cannot absorb weeks of supply-chain disruptions or sudden spikes in fuel prices.
“While the ECLGS 5.0 is a welcome move, the need for funds in the MSME sector is now, so the speed with which funds flow to the needy will determine its effectiveness,” Anil Bhardwaj, secretary general of the Federation of Indian Micro and Small & Medium Enterprises (FISME), said.
According to government estimates, India’s MSME sector supports more than 110 million jobs. Economists say a prolonged disruption in energy supplies and shipping could trigger one of the sharpest employment shocks since the pandemic, particularly in labour-intensive sectors such as textiles, ceramics, leather and engineering goods.