Jump in input costs, labour shortage hit manufacturing

Ludhiana: Labour shortage and jump in input costs, especially fuel, steel, rubber and chemical products, due to disruptions in global supply chain triggered by the West Asia conflict, have impacted manufacturing activities in different sectors, industry representatives said.

Gaurav Munjal, Managing Director of Hero Ecotech Ltd, said input costs in March were 10-15% higher when compared to the previous month.

He said LPG shortages hit production and the situation remained challenging. “I am not saying that we are in a deep mess. We are in a mess, but not a deep mess,” said Munjal, adding that the manufacturing firms are facing challenges on multiple fronts.

Ludhiana-based Hero Ecotech is one of leading manufacturers and exporters of bicycles. The company’s key export markets are the US and Europe. Munjal said high US tariffs also badly impacted exports.

According to the Federation of Indian Export Organisations (FIEO), India’s merchandise exports likely dipped by 7-10% in March due to disruptions in the global supply chain.

“For the full year FY26, we are expecting around 2-3% decline in goods exports,” said FIEO President S C Ralhan.

However, he expressed hope that overall exports, merchandise and services put together, in 2025-26 would be higher than the previous year due to strong growth in services exports.

During the first 11 months of 2025-26, India’s merchandise exports stood at $402.93 billion, while the overall exports was recorded at $790.86 billion, as per the latest official data. In the financial year 2024-25, India’s total exports were recorded at $825.3 billion, out of which $437.7 billion was goods exports. The Ministry of Commerce and Industry is scheduled to release the March and full FY26 trade data later this week.

Ralhan said goods and services combined exports in FY26 are likely to record a growth of 5-6% over the previous year’s $825.3 billion.   

Several manufacturers flagged concern about the shortage of labour and surge in logistics costs.

Sanjoo Tandon, vice president at Eastman, a Ludhiana-based company that manufactures and exports forging and casting parts, said a substantial number of labourers that went on vacation in late February and early March for Holi festival have not returned back for the work.

“Labours are very discouraged. They are going back to their villages,” said Deepak Dumra, Director of Eveline International, manufacturer and exporter of hosiery knitwear.

Amit Marwaha, Managing Director of DRRK Foods, which exports rice under the brand name ‘Crown Basmati Rice’, said rice exports have been hit due to logistics and payment settlement issues.

West Asian countries, especially Iran, Iraq and the GCC nations, are the major importers of Indian Basmati rice. Due to the US-Israel-Iran conflict hardly any rice shipments from India have gone to the Gulf region since the beginning of March.

While the ceasefire and diplomatic engagements between the US and Iran have sent positive signals, the Indian exporters remain cautious.

FIEO President Ralhan said the exporters would not take chances as the situation in the Gulf region remained fragile.

“Freight charges have gone up many folds. Shipping containers are not available,” said Sanjoo Tandon, adding it would take several months to streamline the situation.