Gujarat’s textile industry faces Diwali shutdown threat as yarn prices surge 45 per cent

AHMEDABAD: Surat city ’s weaving industry, the backbone of Gujarat’s textile economy, is staring at an early Diwali shutdown as yarn prices have surged 40% to 45% since June while demand for finished fabrics remains weak. With mounting production costs, unsold stocks and stalled payments squeezing cash flows, factory owners fear they may have to shut their looms 15 days ahead of schedule and keep them closed for another fortnight after Diwali.

The crisis has pushed several small weaving units to cut production and observe weekly holidays to contain losses. Industry representatives have warned that unless the government intervenes to curb what they describe as artificial yarn price hikes and ensures supplies at internationally competitive rates, the disruption could deepen across Gujarat’s textile manufacturing network.

The mismatch between soaring input costs and sluggish demand has left weavers caught in a financial squeeze.

While yarn, the primary raw material for fabric production, has become significantly more expensive, grey fabric and finished textiles are failing to command remunerative prices in local and national markets, even during the festive season. Consequently, inventories are piling up at factories, payment cycles are slowing, and working capital is drying up.