India’s textile sector is facing a crisis due to a severe shortage of natural gas and rising costs, exacerbated by geopolitical tensions. Natural gas consumption in India is approximately 189 million MMSCMD, with over half being imports.
The government issued a Natural Gas Control Order to prioritize key sectors, yet industrial buyers still experience supply uncertainty. GAIL (India) Limited is now heavily reliant on the spot market for gas, which has led to increased production costs.
Currently, GAIL pays premium prices of $17-$20 MMBtu for urgent cargoes, compared to the usual spot prices of $12-$15 MMBtu. This price increase significantly impacts manufacturers in the textile industry.
The ongoing geopolitical tensions are disrupting gas supply to India’s textile centers. For instance, around 60% of India’s natural gas imports transit through the Hormuz Strait, which is currently unstable.
Despite the government’s aim for 80% allocation stability for industrial consumers, this limits production capacity. Manufacturers are struggling to cope with these challenges as they face rising operational costs.
Key impacts on the textile sector include:
- Severe pressure on production due to natural gas and LPG shortages.
- Increased operational costs driven by reliance on expensive spot market gas.
- Uncertainty in supply affecting planning and output.
Officials have not confirmed specific timelines for resolution of these issues. The situation remains critical as manufacturers call for urgent measures to stabilize supply and pricing. As one manufacturer noted, “This high price indicates a significant burden on energy-dependent sectors like textiles.”
