Disruptions to fossil fuel supplies amidst global energy crises expose the vulnerability of India’s textile industry. A new report suggests that transitioning to renewable electricity and electrified heat systems could profoundly cut costs, enhance sustainability, and bolster international competitiveness ahead of forthcoming trade and climate regulations.
India’s textile industry is facing a stark reminder of how exposed it remains to fossil fuel shocks. Disruptions to LPG supplies during the energy crisis linked to the US-Iran conflict forced temporary shutdowns and production cuts, while sharp swings in crude and fuel prices pushed up costs across one of the country’s biggest exporting sectors. In textile hubs such as Surat, Tiruppur and Coimbatore, mills and small firms were squeezed by higher energy bills, weaker order books and interruptions to day-to-day operations, underscoring how tightly production still depends on imported fuel and other volatile energy sources.
The sector’s energy mix remains heavily reliant on LPG, furnace oil, diesel, coal and biomass, leaving manufacturers vulnerable to both price spikes and supply bottlenecks. According to Climate Risk Horizons, that dependence is not only a climate problem but also a commercial one. The group’s report, “Fashioning a Net Zero Future for Tamil Nadu’s Textile Sector”, says a full switch to renewable electricity in Tamil Nadu could cut energy expenditure by 35%, with annual savings of between ₹2,320 crore and ₹3,250 crore. At a renewable power price of ₹5.5 per kWh, the sector could save about ₹2,790 crore a year.
The savings could be even larger if cleaner electricity is paired with electrified heat systems, which would replace gas or coal boilers in parts of the manufacturing process. Climate Risk Horizons estimates that this broader shift could reduce fuel expenditure by 15% to 27%, delivering annual savings of ₹1,560 crore to ₹2,770 crore depending on system efficiency. The report draws on Annual Survey of Industries data and argues that mature textile clusters in Tiruppur, Coimbatore, Erode and Karur are particularly well placed to benefit because they already have experience with renewable energy adoption.
The financial case matters because Indian manufacturers are competing against producers in Bangladesh, Vietnam and China at a time when buyers are increasingly sensitive to sustainability. Higher energy costs narrow margins and reduce flexibility in export pricing, while cleaner production could help firms prepare for tighter trade rules and carbon-related measures in key markets. Although textiles are not currently covered by the European Union’s Carbon Border Adjustment Mechanism, the possibility of future inclusion adds another reason for Indian mills to lower emissions. With the Ministry of Textiles aiming for a $300 billion industry by 2030, the report suggests that cheaper, cleaner and more reliable energy will be central to meeting that target.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
