West Asia Crisis Hits Ludhiana Handtool Export Units With Labour, Gas Supply Shortages, High Input Costs

The West Asia crisis is affecting export-oriented manufacturing units here, with handtool companies facing challenges such as labour shortages, rising input costs and inadequate gas supply, impacting production and potentially weighing on the country's exports.

The other difficulties they are facing include high interest rates, container availability, increase in shipping and air freights and high insurance cost.

The units are however hopeful that the ceasefire announced between the US and Iran for 15 days will lead to an end to the conflict, helping ease these challenges.

The joint attack launched by the US and Israel on Iran on February 28 severely disrupted the country's exports to West Asia, pushed up shipping freight, air transport prices and insurance costs.

Disruptions in the movement of oil and gas from Middle East countries have also led to an increase in the prices of raw materials such as steel, plastic and rubber.

"Units in Punjab are facing a labour shortage. Workers who had gone to their villages in Uttar Pradesh and Bihar for the Holi festival have not yet returned, and we are reaching out to them. Reverse migration is a major concern," said Federation of Indian Export Organisations (FIEO) President S C Ralhan, who also owns a hand tools unit in the Ludhiana export cluster.

Labours are worried that they may face issues in getting LPG cylinders due to the West Asia crisis.

Ralhan said the government should support companies in constructing housing for workers. "It would be a great help. Companies are taking steps, but government intervention is needed," he said.

Head of hand-tools unit at Eastman Cast & Forge Ltd, Sanjoo Tandon, too, said the conflict has impacted exports in March.

"Freight has gone up significantly. Prices of inputs such as steel, packaging material and nickel are high. Steel prices are up by 10-15 per cent. Exports in March were hit by about 5-10 per cent due to the war," he said, adding that to deal with inadequate gas supply, the company is using alternate fuel like furnace oil.

"I do not think prices will come down soon," Tandon said.

He added that containers are stuck at various ports or on the high seas due to the conflict.

Of the total handtool exports, about 10 per cent go to the UAE, and in March, there were no exports to the Middle Eastern region.

"Dubai is also a destination for re-exports to regions like Africa. The crisis has impacted that also," Tandon said.

He expressed hope that in the coming months, movement of shipments will become smoother, provided the war comes to an end.

Viren Marwaha, Assistant Director (Sales and Marketing) at DRRK Foods, a leading basmati rice exporter, said the war has halted exports to the Middle Eastern region (UAE, Qatar and Oman), a key export destination for the company.

"In March, there is a huge impact on our exports. Shipping companies are not providing services for that region. There is a 20-25 per cent fall in shipments," Marwaha said, adding that their is no issue of labour shortage.

Gaurav Munjal, Managing Director at Hero Ecotech Ltd, said industrial gas is not available and the company is using diesel.

"Prices of inputs like plastics and rubber have increased. Due to this, cost of production has increased 10-15 per cent," he said, adding that prices normally increase in the summer season, but this time has gone up an additional 4-5 per cent.

Garment unit Eveline International Director Deepak Dumra said earlier US tariffs and now the war are creating difficulties for businesses.

"Things are tough. Orders are on hold. There is uncertainty everywhere," he said, expressing hope that "things will settle down in the coming months".