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. For units operating on tight margins, the combination of higher production expenses and delayed payments has made it increasingly difficult to sustain daily operations.
Mahendra Ramoliya, a veteran industrialist and director at Surat’s prominent Sachin GIDC industrial estate, said the sharp increase in yarn prices since June, following the outbreak of conflict in the Middle East, has severely disrupted the textile value chain.
“Yarn is the backbone of Surat’s textile industry, and such a steep increase in its price has placed an unbearable burden on weaving units. The problem is compounded by the absence of adequate demand for finished fabric. Manufacturers are being forced to produce at higher costs without any assurance of remunerative returns,” Ramoliya said.
He added that the impact was already visible on the factory floor, with several units operating for fewer days each week to limit mounting losses.
If the situation persists, he warned, the customary Diwali vacation could begin nearly 15 days early, with some factories potentially remaining shut for a month or longer.
Weavers are now pressing the government for immediate policy intervention, arguing that unchecked yarn price increases are undermining the competitiveness of Surat’s textile manufacturing sector.
Ramoliya said the government must closely monitor yarn pricing and take steps to curb what industry representatives allege are artificial increases imposed by spinners.
He also called for yarn to be made available to domestic weavers at internationally competitive Free On Board (FOB) rates.
“Urgent policy-level decisions are needed to pull the industry out of this crisis. The government must ensure that yarn prices remain reasonable and that local weavers can access raw materials at international FOB rates. Lower and more competitive input costs would provide much-needed relief to manufacturers struggling with weak demand and mounting financial pressure,” he said.
The industry believes that prompt action could help reduce production costs, improve cash flow and prevent an early shutdown during the crucial festive trading period.
For Gujarat’s textile economy, the implications extend beyond individual weaving units. Prolonged factory closures could disrupt fabric supplies, trade activity and the earnings of workers and businesses dependent on Surat’s textile manufacturing ecosystem.
With Diwali approaching, the industry faces a narrowing window to restore viability. Unless yarn prices ease or fabric demand improves, weaving units may have little choice but to reduce operations further, turning the festive season into a period of prolonged uncertainty for Surat’s textile trade.