Surat’s Solar Industry Faces Crisis as Gulf Tensions Disrupt Supply Chains

Surat: The industry in the city is facing a deepening crisis in its rapidly expanding solar panel manufacturing sector, as escalating tensions in the Gulf, particularly the Iran-Israel conflict, have disrupted supply chains and put orders worth nearly ₹25,000 crore at risk.

The city accounts for around 50–55 per cent of India’s total solar panel production, positioning it as a key hub for the industry. Experts warn that prolonged instability in Surat could impact the country’s broader renewable energy targets.

Industry representatives say the conflict has unsettled global logistics networks, leading to irregular supplies of raw materials sourced from countries such as China, Vietnam, Thailand, Indonesia, and Malaysia. This has slowed production across multiple manufacturing units.

The situation has worsened due to a sharp rise in shipping costs, with container freight rates increasing from USD 600–900 to USD 3,500–4,000—an almost 400 per cent surge.

Additionally, solar cells and critical components are procured in US dollars, and the weakening rupee has further inflated import costs. Manufacturers are now under pressure to fulfil pending orders worth ₹25,000 crore within three to four months, most of which were booked at fixed prices. As a result, companies are absorbing losses of nearly 20 per cent per order, severely impacting small and medium enterprises.

Surat’s solar industry also caters to export markets in the Middle East, Africa, Europe, and the United States. However, ongoing geopolitical tensions have disrupted shipping routes, increased transit times, and made exports financially unviable. With freight rates remaining high and fresh orders slowing, manufacturers are hesitant to take on new contracts at unsustainable prices.

Industry stakeholders caution that if the situation persists, it could have wider economic repercussions for Surat, putting thousands of jobs at risk. There are increasing demands for government intervention, including financial relief measures and a review of import duties. DeshGujarat