Rising crude, Freight Costs Squeeze India’s textile sector
India’s textile industry is facing renewed pressure as rising crude oil prices and surging freight rates drive up input costs, tightening margins across the value chain.
Raw material costs have increased by 20–25% in recent weeks, tracking crude oil prices crossing the US$ 100 per barrel mark. The impact is particularly significant for synthetic fibres such as polyester and nylon, which are directly linked to petroleum derivatives.
Polyester prices have risen by around 20%, while nylon costs are up by about 5%. At the same time, dyes and chemicals have become nearly 20% more expensive, pushing processing costs higher especially in dyeing units, where expenses have surged by nearly 30%. Overall garment manufacturing costs have increased by 10–15%.
Despite the sharp rise in costs, most manufacturers are holding back on price hikes due to concerns over demand, particularly in key export markets like the United States and the European Union, which together account for nearly 47% of India’s textile exports.
Freight costs have further compounded the challenge, rising by 80–90% amid ongoing supply chain disruptions and geopolitical tensions. Exporters are now facing elevated costs both in production and logistics.
The strain is already visible in key manufacturing hubs such as Tiruppur, where earlier disruptions had led to order losses of around Rs 15,000 crore and a temporary production drop of up to 30%, highlighting the sector’s vulnerability to external shocks.
Industry stakeholders warn that if cost pressures persist, price increases may become inevitable in the coming months.
At a structural level, the sector continues to grapple with its reliance on cotton, even as global demand shifts toward man-made fibres and athleisure. Competing nations like Bangladesh and Vietnam have moved faster in aligning with these trends.
To address these challenges, the government is pushing initiatives such as the PM MITRA parks and the production-linked incentive (PLI) scheme to boost investment in man-made fibres and technical textiles, aiming to strengthen India’s competitiveness in global markets.
