Gujarat’s manufacturing industry exports have been in doubt for almost a year due to the fact that the impacts of the Russia-Ukraine war are still having an impact on the world economy. Advanced economies, particularly those in the US and Europe, which are India’s top export markets, are driving the global downturn. The manufacturing sector in Gujarat has been impacted by the sharp spike in energy prices and general economic slowdown brought on by rising interest rates in Europe and the US.
The scenario holds true for other industries, including ceramics, chemicals, textiles, especially yarn and denim, and gems and jewellery. According to a CRISIL analysis, advanced economies will be hardest hit in 2022 as they aggressively pursue monetary tightening.
This has had a greater impact on discretionary spending. Since both B2C and B2B demand in the US and Europe has decreased, Gujarat’s exporters in the majority of sectors—including textiles, gems and jewellery, and chemicals, among others—have experienced a double whammy, according to Pathik Patwari, president of Gujarat Chamber of Trade and Industry (GCCI).
EXPORTS OF DYE FELL 21%
Exports have drastically decreased as a result of European textile producers’ insufficient purchases of intermediates and colours. According to Chemexcil’s data, the decreased demand on the global market caused a 21% reduction in dye exports from April to December 2022. Production is no longer feasible because of the high cost of raw materials at a time when demand is low. Manufacturers cannot pass on expenses to end-consumers at a time like this. Thus, significant manufacturing facilities are either closed or running at no more than 30% of capacity, said Bhupendra Patel, chairman of Chemexcil (Gujarat).
DIAMONDS ARE IN LESS DEMAND
Demand for cut and polished diamonds significantly decreased as a result of the global economic slowdown and recessionary tendency in the US, the UK, and the rest of Europe. The centre for polished diamonds is Surat. Data from the Gems and Jewellery Export Promotion Council (GJEPC) shows that between April 2022 and January 2023, the gross exports of cut and polished diamonds decreased by 10% to $18,070 million (Rs 1,47,828 crore approx). Even the growth of exports of gold jewellery slowed throughout the period due to the increase in gold prices. The UK, according to Haresh Acharya, director of the India Bullion and Jewellers’ Association among the major markets for cut and polished diamonds are the US, France, Germany, and Switzerland. Due to the economic slowdown in these nations brought on by the Russia-Ukraine war, discretionary spending decreased. As a result, few people were interested in polished diamonds, a luxury good.
200 CERAMIC TILE MAKERS CLOSE THEIR BUSINESS
With the price of natural gas flying through the roof since the RussiaUkraine war, ceramic tile companies are confronting a significant jump in manufacturing expenses. One of the main causes of capacity utilisations dropping to 50% or less in many units is the increase in input costs, which is coupled with a decline in demand in the export market.
The price of natural gas rose significantly last year, according to KG Kundariya, former president of the Morbi Ceramics Association (MCA). exceeded Rs 60 per cubic meter-standard. On the other hand, both domestic and foreign market demand have decreased. The real estate market’s demand has been hampered by rising interest rates, which has reduced the demand for tiles.
DECLINES IN TEXTILE RAW MATERIALS AND APPAREL PROCUREMENT
According to projections made by the GCCI textiles committee, cotton yarn exports decreased by almost 60% between April and December 2022 compared to the same period. The viability of the textile industry in major textile-producing nations like Portugal, France, Spain, and Germany is under threat as a result of the approximately six-fold increase in gas and power prices in Europe. The purchase of raw materials from India has decreased as a result. The majority of cotton and polyester yarns fit this description, according to committee chairman Rahul Shah. Moreover, rising Interest rates have limited discretionary expenditure, which has resulted in a decrease in total demand for clothing. “This has a major impact on clothing manufacturers, who in turn affect domestic fabric producers. In such situations, the entire value chain is harmed, and many brands have cut back on their purchases,” added another participant in the market. Due to weakening demand, even denim producers reported decreased third-quarter revenues.
