28,000 Factories in Gujarat Struggle for Survival; Production Comes to a Grinding Halt, Jobs of Lakhs of Workers in Jeopardy
Factories of Gujarat—often hailed as India's industrial powerhouse—are passing through a phase of grave crisis. Out of the state's about 4,25,000 registered industrial units, more than 28,000 are currently fighting a battle for survival. From 'Morbi'—the world's ceramics hub—to 'Surat'—the textile capital—disruptions in supply chains and skyrocketing raw material prices have brought production to a grinding halt.
While, on one hand, over 450 factories in Morbi have shut down, the government, on the other, dismisses the situation as merely a "practical hurdle," claiming that normalcy will be restored soon. Will this industrial crisis in Gujarat also impact the national economy?
1,212 units have shut down completely
Alarming reports are emerging from Gujarat, India's largest industrial hub. The pace of production appears to be slowing down within the state's industrial units—entities considered to be the very backbone of its economy. According to the latest data, out of Gujarat's 4,11,733 registered industrial units, 1,212 have shut down completely, while 28,517 are currently operating significantly below their full capacity.
Morbi and Surat worst hit
The crisis is having its most profound impact on Morbi, the world-renowned ceramics hub. Here, 450 out of approximately 670 factories have ceased operations. Similarly, Surat's textile industry is also grappling with rising raw material costs and a shortage of labor. A significant decline in production has also been recorded in the chemical sectors of Jetpur and Ahmedabad.
No situation involving large-scale layoffs
However, the state government has categorically denied that these reports are linked to an energy crisis. Industry Commissioner K.C. Sampat clarified that the current situation is not a result of power shortages, but is primarily caused by hurdles in logistics, transportation, and international supply chains. The government asserts that there is no situation involving large-scale layoffs, and that reports regarding an exodus of workers are being exaggerated.
Rising crude oil prices and surge in shipping costs
Sandeep Engineer, President of the Gujarat Chamber of Commerce and Industry (GCCI), stated that rising crude oil prices and a surge in shipping costs have crippled industries—particularly those that rely on imports for their raw materials.
Measures Taken by the Government
To get the industry back on track, the government has undertaken several significant interventions:
Tax Cuts: Duties levied on polymers and chemicals have been reduced.
Relaxation of Norms: Compliance regulations have been eased for factories adopting alternative fuels.
Leveraging the Gas Network: Gujarat's robust gas pipeline network is proving instrumental in restarting several units that had previously shut down.
While the government claims that the situation is under control, the reality on the ground suggests that it will take some time for industrial activities to return to normalcy. If supply chain disruptions are not resolved soon, it is inevitable that this will have an adverse impact on the state's revenue and employment.