Ludhiana, long known as the knitwear hub of India is entering the festive trading window under a cloud. Makers and traders of hosiery, knitwear and garments have seen raw material bills rise by around 40% within a few months.
Ludhiana produces 95% of the country’s winterwear and meets as much as 90% of domestic demand, so the strain extends well beyond the city.
Crude-linked inputs erode margins
Producers have had almost no room to pass the increases on. Fighting in Ukraine and West Asia has produced wild swings in input prices, and the Middle East conflict has since spread to the Red Sea shipping lane and drawn in Saudi Arabia, a leading oil producer.
Costlier crude has cut deeply into the margins of manufacturers working in polyester, nylon and spandex.
Wholesale prices accelerate
Data from the Office of the Economic Adviser shows annual wholesale inflation for manufactured textiles moved from 12.63% in August to 13.85% in September.
Chemical products went from 14.30% to 16.74% over the same period, against a sudden September rise in the overall Wholesale Price Index.
The same source, under the Department for Promotion of Industry and Internal Trade, puts the year-on-year rise in the wholesale index for purified terephthalic acid (PTA), a core polyester feedstock, at 49.19% for September. Monoethylene glycol (MEG), another key input, rose 34.75%.
Cotton caught in a separate squeeze
Cotton has followed its own course. Amit Dashora, Head of Sales and Marketing at Infinite Fashion India Private Limited said international brands have stopped accepting Chinese cotton, so any of them producing apparel in China now require their suppliers to buy fibre from elsewhere. That, he said, makes India the obvious alternative.
A Reuters investigation found that American import restrictions under the Uyghur Forced Labor Prevention Act have in practice shut out Chinese cotton, along with any garments from global labels that use it.
Heavy sourcing from India has left domestic cotton prices unsteady, Dashora explained. Rising global yarn demand compounds the problem, because Indian suppliers prefer to ship to China, where dollar-denominated sales pay better. Chasing those dollar margins unsettles prices at home. In his view, the combined effect is severe cost-push inflation across hosiery and fabrics.
The Union Ministry of Textiles reports that cotton output slipped from 297.24 lakh bales in 2024–25 to 290.91 lakh bales in 2025–26.
It also recorded a rise of about 18% in domestic prices for the Shankar-6 variety over the period it examined.
Industry voices: strike, shortages and halved capacity
Amit Pandey, head of operations at Vardhman Polytex Limited, said profitability had fallen so steeply that Ludhiana’s hosiery industry called a week-long strike.
He described the situation as a crisis spanning natural and synthetic fibre markets and said it was national rather than local.
Shifting market conditions have produced a serious shortage of polyester feedstocks, notably PTA and Dimethyl Terephthalate (DMT), Pandey said. Prices have risen from Rs 105–110 per kg to Rs 145 per kg, which hurts manufacturers nationwide.
He also set out the pressure on natural fibres. Cotton output was already weak following reduced sowing and cultivation the previous year, producing an early shortage.
Polyester then rose by roughly 30%, pushing its users towards cotton spinning and garment production. The two effects combined to send cotton prices extremely high, and after three to four months of increases they have yet to settle.
Orders are the first casualty. Vijay Kumar of Nato International said the capacity flowing from manufacturers to wholesalers has been cut by nearly half. He expects the approaching winter and festive period to be flat, with little prospect of a quick rebound.
Smaller units bear the brunt
Small manufacturers are the worst affected. According to the Union Ministry of MSMEs, Ludhiana is home to about 1,40,000 MSME enterprises making hosiery, knitwear and garments.
“Trader Mohit Jain observed that large units are coping, thanks to substantial capital backing and steady cash flows,” The Print reported.
Smaller operations, especially those with annual sales of Rs 1 crore to Rs 2 crore and margins of only 8–10%, are in far deeper trouble, he said, adding that many micro units now face possible closure.
Overheads are also climbing. Kapil Joshi, President of the Purana Bazar Hosiery Association, said inflation in raw materials has pushed up labour costs and forced wage increases.
Sharply higher yarn rates have swollen inventory and lifted overall product costs, he said, leaving buyers who walk in the door finding goods too expensive. Everything from sewing thread to packaging has become dearer and harder to absorb.
Because India’s hosiery and fabric sectors depend on imported inputs, manufacturers are doubly anxious about supply and price. Joshi said that current measures have not relieved cost pressure enough.
Policy response
Joshi’s request may not be met immediately, but both the Centre and the state have Ludhiana on their agenda. The inaugural meeting of the Development Council for Textile Industry on October 6, considered how to secure steady, competitive supplies of cotton, man-made fibres, yarn, dyes and chemicals.
It also addressed cost competitiveness along the textile value chain, covering fabric processing and apparel manufacturing, and ways to bolster assistance for MSMEs.
