Iran-Israel-US war disrupts industry chain, costs surge, labour exits

Already under strain for the past three years due to the Russia-Ukraine war, inflation and disruption in European markets, the Israel-Hamas conflict and Trump’s tariffs, the industry is now facing another pressure because of the US-Israel-Iran war.

Industrial production has been severely affected by a shortage of liquefied petroleum gas (LPG), a sharp rise in yarn prices — particularly polyester — higher packaging material costs, increased dyeing charges, rising freight rates and longer delivery times to buyers.

Adding to the strain, industries are now grappling with a fresh labour shortage, as a large number of workers have begun returning to their native villages due to the unavailability of LPG for cooking. Industrialists have distributed electric induction cookers to workers, but migration continues.

Industries in Bapoli, Mandi-Israna and the Barhi industrial zone in Gannaur, along with Kundli and Rai industrial areas, are also feeling the impact of the Iran-Israel-US conflict. Production has declined across nearly all sectors.

Panipat’s handloom and textile products are exported worldwide. The industry has an annual turnover of about Rs 60,000 crore, of which exports account for around Rs 20,000 crore.

Exporters ship handloom and powerloom products — including bath mats, floor coverings, rugs, carpets, bedsheets, towels, curtains, sofa fabrics, cushions, blankets, mattresses and pouffes — to markets across the globe.

However, the entire industrial processing chain has been disrupted by the Iran-Israel-US war. Dyeing, considered the backbone of textile and handloom industries, has been hit first due to LPG shortages.

The production chain has been affected at multiple levels: rising yarn prices; disrupted dyeing processes due to gas shortages; increased production costs; higher packaging expenses; elevated freight charges; longer shipment times following the closure of the Strait of Hormuz; and labour shortages as workers struggle to obtain LPG cylinders and return to their villages.

According to available information, around 400 dyeing units in Panipat have shut down due to LPG shortages, while supply of piped natural gas (PNG) to about 150 units has been cut by up to 60 per cent. LPG-dependent units in Barhi and Kundli are also facing shutdowns.

Nitin Arora, president of the Panipat Dyers’ Association, said Sector 29 Part-2 houses around 350 dyeing units. Due to LPG shortages, over 150 units dependent on LPG have shut following supply cuts, while over 100 units in outer areas are also closed due to disruption. Around 150 units operating on PNG are also restricted to 60 per cent supply, he added.

Vinod Dhamija, chairman of the Haryana Chamber of Commerce and Industries, Panipat chapter, said the conflict has affected not just gas-based industries but the entire industrial chain.

Prices have surged sharply, with an overall increase of nearly 80 per cent. Polyester yarn prices have risen by about 40 per cent and cotton yarn by around 20 per cent, pushing production costs to unsustainable levels, he said.

With dyeing as the starting point of production, widespread shutdowns of dyeing units have further escalated costs, while operational units are charging higher rates, he added.

Shipment timelines have also lengthened. Deliveries that earlier took around 20 days now exceed 40 days, alongside higher freight charges, Dhamija said. Overseas buyers have begun cancelling or putting orders on hold due to the situation, he added.

Vijender Jain, general secretary of the Barhi Industrial Zone, said the war has disrupted the entire industrial process. Production has declined due to LPG shortages and rationing of PNG supply.

Labour migration is a major concern, he said, adding workers using small cylinders are struggling to refill them and facing high costs. As a result, many have returned to their homes.

Narender Nanda, vice-president of the Barhi Industrial Zone, said the industry has been under pressure for three years and is now facing further difficulties due to the conflict. Prices of petroleum products, yarn, dyeing chemicals and packaging materials have been on a rise. Chemicals sourced from Gujarat have also been affected due to gas supply issues, pushing production costs higher, he said.

Around 60 per cent of production across industries has been impacted, he added.

Amit Gupta, president of the Barhi Industrial Zone, said the sector is under severe stress. Of about 650 operational units, over 125 LPG-dependent units have been badly affected. Around 60 per cent of units are in textiles and operations across these have been disrupted. Rising raw material costs have further affected overall industrial activity, he added.

Subhash Gupta, director of the Kundli Industrial Area, said the global situation has severely affected industries. Exports of utensils from Kundli have also been hit. Alongside production challenges, LPG shortages have impacted workers significantly.

Workers are returning to their hometowns as they are unable to obtain cooking gas for their rented accommodation, he said. Although electric induction cookers and utensils have been distributed, many landlords do not allow their use, forcing workers to leave, he added.