AHMEDABAD: The West Asia conflict is rattling Gujarat’s industry, shutting 170 ceramic factories in Morbi amid propane shortages and disrupting Surat’s export-driven trade.
The ripple effects of the West Asia conflict are now visibly shaking Gujarat’s industrial economy, with the state’s flagship manufacturing clusters, Morbi and Surat, beginning to feel the pressure of disrupted supply chains, rising logistics costs and collapsing export momentum. This has left consignments worth crores stranded and threatening payments and jobs across the state.
The first shock has hit Morbi, widely known as the ceramic capital of India. The city’s ceramic industry is staring at a deepening crisis after 70 more propane-gas-based factories shut in the last three days, pushing the total shutdown count to 170 units since the war began.
Ceramic manufacturing in Morbi runs primarily on natural gas and propane. While natural gas is supplied through Gujarat Gas, propane gas is sourced through private suppliers and tanker agents. The war-triggered disruption in international fuel logistics has broken this supply chain, leaving factories without a crucial production fuel.
Just days earlier, the Morbi Ceramic Association had warned of a looming crisis. Association president Manojbhai Airwadia had said during a press conference, “Industrialists are going through a very difficult situation. Around 100 ceramic factories had to shut down in just two days due to the sudden stoppage of propane gas supply.”
Although a few units briefly restarted after emergency tanker supplies were arranged by some gas companies, the relief proved temporary. Industrial sources now confirm that another 70 units have halted operations, taking the closure tally to 170 factories.
Industry insiders warn that if the supply chain does not stabilise quickly, the crisis could escalate dramatically. Estimates within the sector suggest up to 450 ceramic factories could shut down in the coming days, threatening thousands of jobs in Gujarat’s largest tile-manufacturing cluster.
The ceramic sector in Morbi alone employs more than four lakh people directly and indirectly, with each factory typically employing 250–300 workers. With kilns going cold, thousands of workers, many of them migrants, now face uncertainty over wages and livelihoods.
But ceramics are only the first casualty.
The crisis has simultaneously begun to squeeze Morbi’s paper mill sector, which supplies packaging materials to the ceramic industry.
Paper mills in the region rely heavily on imported waste paper, but shipments arriving through international maritime routes have suddenly slowed due to disruptions linked to the war. The supply squeeze has triggered a sharp price spike, with containers that earlier cost 3,600 now touching nearly 5,600.
A few days ago, Morbi Paper Mill Association president Shailesh Patel warned that the situation could soon become unsustainable. “The products manufactured by Morbi’s paper mills are mainly used in the ceramic industry. If ceramic units close down, our mills will inevitably have to shut as well. With disruptions in imported waste paper supply and rising fuel costs, sustaining operations is becoming extremely difficult,” he said.
The war’s global economic shock is now spreading across Morbi’s wider industrial ecosystem, pushing the polypack manufacturing sector toward a similar breakdown.
Morbi hosts nearly 200 polypack factories, generating direct and indirect employment for nearly 20,000 people. These units manufacture plastic packaging materials widely used by industries across India.
However, the sector is now facing a double blow — raw material shortages and sharp price increases.
Plastic granules, the primary raw material for the industry, were available before the war at Rs 90–Rs 92 per kilogram. Now official company price lists quote Rs 135–Rs 140 per kilogram, yet manufacturers say supplies are almost unavailable.
As a result, many factories are being forced into the black market, where granules are selling for Rs 150–Rs160 per kilogram, pushing production costs sharply higher.
The crisis is linked to the sector’s heavy dependence on imported materials. Industry data shows that 40 percent of the raw materials used by Morbi’s polypack factories are imported, while the remaining 60 percent comes from domestic suppliers. With international shipments disrupted by the conflict, imports have slowed drastically.
Logistics costs have worsened the situation further.
Container freight rates have tripled, jumping from Rs 1,000 to nearly Rs 3,000 per container, drastically raising the cost of transporting both raw materials and finished goods.
The impact of the conflict is also being felt in Surat, Gujarat’s major export hub, where textile, diamond and jewellery industries are facing disruptions in global trade routes.
Exporters say the crisis comes at a particularly sensitive moment. The Central Government’s recent decision to cut tariffs on diamond jewellery had briefly revived market optimism, but the outbreak of war has quickly reversed that momentum.
Security concerns over the conflict zone have led to cancellations of several international cargo flights, directly affecting shipments to West Asian markets.
As a result, finished gems and jewellery worth crores of rupees are now stranded at airports and ports in Surat and Mumbai, with exporters unable to dispatch consignments.
Industry leaders warn that prolonged disruption could trigger serious payment delays and defaults. The concern is particularly acute because nearly 35 percent of India’s jewellery exports are destined for the United States, a market that traders fear could now see a sharp drop in orders despite the newly introduced zero-percent tariff benefit.
From factory shutdowns in Morbi to export blockages in Surat, the fallout of the Iran–Israel war is rapidly evolving into a statewide industrial stress test for Gujarat’s export-driven economy. Industry leaders say the coming weeks will determine whether the disruption remains temporary or escalates into a full-blown manufacturing crisis.