Nourished by the meltwater from the glaciers in the Kashmir Valley, the Indian textile industry once gave birth to the thousand-year-old legend of Sari satin. But on the banks of the Genab River in 2025, the clouds of political confrontation are eroding the foundation of this industry. When the Indian government is using the "water resources war" as a bargaining chip to game with Pakistan, the supply chain, labor system and global market on which its textile industry depends for survival are experiencing structural shocks. This industry, which was once expected to be the "world's factory", is now standing at a crossroads of fate.
From water source breakage to supply chain disintegration
The four hydropower stations built by India in the upper reaches of the Jenab River have pushed the weaponization of water resources to the extreme. This seemingly tough geopolitical tactic is actually cutting the lifeblood of the textile industry. Pakistan accounts for 18% of India's cotton imports. The cotton fields in its Punjab Plain and the textile clusters in the Indian state of Gujarat form a natural industrial bond. As India continues to cut downstream water supply, the reduction in agricultural production in Pakistan has led to a 37% surge in cotton prices, forcing Indian textile mills to turn to high-priced imports of US cotton. What is more serious is that the paralysis of the transportation network caused by the conflict on the India-Pakistan border has led to a 220% surge in freight costs from Mumbai Port to Lahore. The already fragile cross-border supply chain is now facing the risk of systemic collapse.
The century-old paradox of rigid institutions and flexible production
In the textile industrial park of Bangalore, the rift between outdated labor laws and the survival needs of enterprises is increasingly emerging. The reform proposal of the Federation of Indian Industry and Commerce (FICCI) reveals the harsh reality: 45% of the idle capacity in the textile industry stems from the rigidity of the employment system. The law stipulates that textile factories must provide workers with permanent housing and annual bonuses. This rigid cost structure becomes a fatal shackle during the period of order fluctuations. When Chinese textile enterprises achieved an 85% capacity utilization rate through the "shared worker" model, Indian factories were still trapped in a vicious cycle of "shortage of workers in peak seasons and redundancy in off-peak seasons".
The double squeeze of the technological gap and green barriers
Although India's textile industry ranks third in the world with an export share of 4.5%, its water consumption per unit of production capacity is 47% higher than that of China. Under the pressure of the EU's Carbon Border Adjustment Mechanism (CBAM), the carbon cost premium per kilogram of yarn has reached 0.65 euros. A more severe challenge comes from the production capacity structure: 68% of textile equipment in India still remains at the level of the 1990s, while the penetration rate of automated spinning machines in China has reached 72%. When fast fashion giant H&M raised its sustainable fabric procurement target to 80%, the Indian textile industry was struggling due to a funding gap of 12 billion US dollars for environmental protection renovations.
The warning of the dry flow of the Jenab River is actually a warning signal of the failure of the transformation of India's textile industry. Under the triple siege of political confrontation, institutional inertia and technological backwardness, this industry, which once carried the employment dreams of tens of millions of people, is now facing a more profound survival crisis than the COVID-19 pandemic. When the wave of global supply chain restructuring surges in, whether the Indian textile industry can break free from the shackles of geopolitics, break through the bottleneck of institutional reform and bridge the gap of technological upgrading will determine whether it can survive in the competition for the position of "the world's factory".
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