ABOUT 50 workers are engrossed in their own machines, weaving designs into garments at a unit in one of the three clusters of Vapi Industrial Estate in Valsad district. These clothes will find their way to some of the biggest fashion and apparel brands in India.But uncertainty looms large not only among these workers but also the management, both without any clear view of when the conflict in West Asia would end. For manufacturers, the war has significantly driven up production costs, and hit their existing order books. And for workers, the inability to procure LPG cylinders has caused acute anxiety, triggering unfounded fears of a lockdown that made everything difficult during Covid six years back.Vapi has a concentration of chemical industries, and bulk of its almost 3,000 factories, are mini and micro units. These small scale units in plastics, textiles and engineering, use different petrochemical inputs. The blockade of the Strait of Hormuz has resulted in restricted crude oil supplies disrupting output of petrochemical products that are inputs or raw materials for these units.Sumit Asdhir, owner of a small garment manufacturing unit named Asdhir Impex, said, “The war has impacted our production capacity by roughly 20%. Every phase of the production cycle — sourcing, dyeing, washing, and selling — has been impacted,” he said. “We are seeing a cost increase of Rs 7-8 per piece for washing. For button dyeing, the impact is Rs 2-3 per unit. The impact is huge,” Asdhir said.Raw material costs jumpThe production of man-made fibres has beet hit due to the high cost of key raw materials such as purified terephthalic acid (PTA) and mono-ethylene glycol (MEG). Currently, PTA and MEG are produced by a handful of domestic companies such as Reliance Industries, Indian Oil and MCPI Private Ltd. PTA and MEG are mixed to form ‘melt’, which is then used to spin polyester fibres. These are used to manufacture synthetic textiles, PET resin (used for making bottles), and polyester fibre.India currently faces a PTA shortfall of around 2.5 lakh metric tons per month and a MEG shortfall of 1.5 lakh metric tons per month, said RK Vij, Secretary General of the Polyester Textile Apparel Industry Association. While the PTA shortfall is bridged through imports from China, the MEG shortfall is made good by imports from Saudi Arabia and Kuwait. MEG supplies have almost dried up since the conflict.The price of ‘melt’ was around Rs 84 a kilogram before the war and has risen to Rs 118/kg as of March 28, said Vij. MEG prices have also risen to $800/ton from $600/ton amid the war.Story continues below this adBesides textiles, the sharp price rise of petrochemical products has affected other sectors too. “Raw material costs for plastic manufacturers have risen 60-70%. Production capacities have fallen by up to 50% for many units in the Vapi industrial estate,” said Ajay Kale, who has worked in Reliance Industries and Indorama in the past. He is a consultant for textile units, and also exports plastic and paper items.Plastics, made by processing crude oil, have been the worst affected. “Raw material prices for plastics have already doubled. Thus, companies (that sell plastic products) are also in a fix. You cannot double the prices overnight, right? They have still hiked prices by just 25% for now,” said Devendra Raj Purohit, a trader of plastic products based in Vapi. He has to tread a thin line — protect margins from higher procurement costs and ensure sales don’t drop due to higher prices.Making plastic requires raw materials such as polyethylene, polypropylene (PP), and biaxially oriented polypropylene, which are manufactured from crude oil by Reliance Industries, SRF and others. These are supplied in pellet or powder form to plastic manufacturers, who then make a wide range of household necessities, industrial supplies, polyethylene, packaging products, films, and furniture, among others.“Plastics is the most commonly used product in the country, so when plastic production costs go up, it affects each type of plastic product. We manufacture packaging materials such as PET, PP, or HDPE (high density poly-ethylene), but other types of products have also been impacted,” said a manager at a plastic manufacturing company with a plant in Vapi.Story continues below this ad“Its hard to say how many have been impacted, but it has been widespread. Its typically a low-margin business, so many (units) are working at lower capacities. Some smaller units (around the area) have next to no business left, so it has been difficult,” the manager said, requesting anonymity.The problems are not just limited to plastic manufacturers based in Vapi. “We have seen raw material prices increasing around 30-70% (since the war began). We have had to pass on some of the higher costs to the customers, so the MRPs have increased across our products. We are working at 60% of our capacity right now (from the usual 90-100% capacity),” said Pranay Parikh, head of business development at Mumbai-based Homeline Products, which manufactures daily essentials for kids and households.The textile industry has been hit harder by uncertainty on order books and blocked cash flows than by higher raw material costs. Textile makers often have prior commitments for a few months at fixed rates, ensuring continuity in their order book. However, now that raw material and production costs are rising, these orders are stuck, with cash flows blocked and buyers and suppliers unwilling to negotiate on the pre-determined rates. Most companies are also struggling to lock orders for the future due to the volatile prices.“Threads have become 10% more expensive. Orders from Dubai are on hold. The government has also cut 20% of our gas capacity. On average, raw material costs have shot up by around 8%. The industry, including those in Vapi, Silvassa, Daman, and Dadra, is struggling,” said the chief operating manager at a large textile and garments manufacturing unit in Vapi. “We incurred Rs 50 lakh loss last month. It may rise more if the war drags on. We have an impact of 5-7% currently, which may rise to 10% if the war extends till mid-April,” said the top executive, who did not wish to be named.Story continues below this adThe impact of the war is also seen on the dyeing industry, which is dependent on paints that are primarily made from crude oil. “Colours have seen their rates shoot up. Suppose if a product was for 150 rupees before per litre, now it has risen to 250 rupees. On average, costs have risen by 40-50% through multiple hikes. Polysol, another important raw material, has almost tripled to Rs 115 from Rs 46,” said Maganbhai Savalia, Vice President of the Vapi Industrial Association, who also runs a textile dyeing business.Gas distributors have been facing the brunt of the fuel shortage caused by the war. “Earlier, we used to sell around 20,000 bottles (cylinders) of LPG every month. Now, we only get 1 truck (worth of supplies) in a month, which is 200 bottles,” said a commercial gas distributor in Dadra, who exclusively deals in Hindustan Petroleum products. “Business is almost at a standstill, and it is the same for most gas traders. We can’t even shut shop and go as we have borrowings from the market,” the person said.Workers head back homeThe government has currently only imposed restrictions on gas supply for commercial purposes, leaving domestic supply untouched. Thus, laborers fearing an LPG shortage might seem unreasonable at a surface level. However, speaking to some workers shed light on the situation.Around 60-70% of the worker population in the GIDC area are migrant workers and often lack proper documentation, a “gas book” in this case, which helps in procuring LPG cylinders directly from manufacturers such as Hindustan Petroleum or Indane.Story continues below this adMany workers who do not have this document often procure cylinders unofficially through distributors or even the black market, which works fine for them under normal circumstances. However, when there is a shortage of fuel, prices across these unofficial avenues skyrocket the most due to not being regulated.“We don’t understand the situation that is going on. The best we can do is go back home if living here becomes unaffordable. Atleast at home we will have peace of mind,” said a laborer at a chemicals factory. “What happened during the COVID times? People just wanted to live, incomes didn’t matter. In such situations, they (the migrant population) think let’s just reach home. Whatever happens, at least we will be around our dear ones,” said a human resource manager at a garments manufacturing unit in Vapi.