India’s textile industry is grappling with a severe natural gas shortage, leading to increased production costs and supply uncertainties. Geopolitical tensions further complicate the situation.
India’s textile sector is facing a crisis due to a severe shortage of natural gas and rising costs, exacerbated by geopolitical tensions. As of May 3, 2026, the situation has become dire for manufacturers who rely heavily on this critical resource.
Recent reports indicate that India’s textile and handicraft sectors are under significant pressure. GAIL (India) Limited has turned to the spot market for gas, which has led to skyrocketing production costs. For instance, GAIL is now paying premium prices of $17-$20 MMBtu for urgent cargoes, compared to the usual $12-$15 MMBtu.
That context matters because India’s annual natural gas consumption stands at approximately 189 million MMSCMD, with over half of this being imports. The ongoing geopolitical tensions are severely impacting gas supply, particularly to crucial textile centers such as Surat and Ferozepur.
The government issued a Natural Gas Control Order aimed at prioritizing key sectors, including textiles. However, industrial buyers still face uncertainty regarding supply and high prices. Currently, the government aims for an allocation stability of 80% for industrial consumers, but this limit constrains production capacity.
Moreover, around 60% of natural gas imports transit through the Hormuz Strait—a region notoriously fraught with conflict. This reliance raises questions about India’s energy security and its implications for industries dependent on stable fuel supplies.
Reactions from industry stakeholders have been mixed. Some express frustration over escalating costs that threaten their competitiveness in both domestic and international markets. One industry source remarked, “This high price indicates a significant burden on energy-intensive sectors like textiles.”
Additionally, the LPG shortage compounds the issue, making it even harder for manufacturers to maintain operations. Many are left wondering how long they can sustain production under these conditions.
The current conflict has disrupted global fuel trade routes further, affecting not just textiles but various industrial consumers across India. As GAIL navigates these challenges, officials stress the need for diversification in energy resources.
The situation remains fluid as stakeholders await clearer guidance from the government on how it plans to stabilize supply chains amid these pressures.
