The escalating conflict in the Middle East is beginning to have far-reaching economic consequences beyond energy markets, with Karnataka’s garment factories and silk farms now facing growing pressure. Export disruptions, falling demand and rising transport costs are threatening livelihoods across one of India’s most important textile-producing states.
Major garment hubs such as Bellary and Bengaluru are already experiencing significant disruption. International buyers have begun cancelling contracts as shipments remain stranded at ports and airports, unable to move due to logistical uncertainties linked to the regional conflict. As a result, new garment orders for March 2026 are estimated to have fallen by 25–30%.
The slowdown comes at a critical time for India’s textile export ambitions. In the financial year 2024–25, the country exported readymade garments worth approximately US $ 16–18 billion annually. The European Union accounted for about 32% of these exports, followed by the United States with 27%, the UAE and other Arab countries with 12–15%, and the United Kingdom with roughly 10%. The Indian government has set a target of reaching US $ 100 billion in textile exports by 2030, but current trends suggest that goal may become increasingly difficult to achieve.
Industry estimates indicate that garment exports have already declined by 15–20% in recent months. Goods valued at roughly US $ 2 billion are believed to be stranded on ships or awaiting clearance at airports. Karnataka plays a pivotal role in the sector, contributing around 20% of India’s total garment exports. An industry insider was reported to have warned that if the situation persists, the state’s garment sector could face losses exceeding Rs. 1,000 crore per month.
The effects of the conflict are also being felt in Karnataka’s silk industry. Countries in the Gulf Cooperation Council — including Saudi Arabia, the United Arab Emirates and Kuwait — represent the largest markets for Indian silk. With fears of prolonged instability in the region, consumers have begun cutting back on luxury purchases.
Demand for Indian silk exports has already fallen by an estimated 8%, leaving exporters with large volumes of unsold inventory that are now being redirected into the domestic market. The consequences are particularly visible in Ramanagara and Shidlaghatta, widely regarded as the state’s silk heartland.
Cocoon prices in these areas have dropped sharply. After previously touching around Rs. 1,000 (US $ 10.83)per kilogram, prices have failed to cross Rs. 700 (US $ 7.58) for more than a week. Since Karnataka accounts for roughly 45–50% of India’s mulberry silk production, reductions in export demand are having an immediate impact on small cocoon farmers.
Logistical pressures are compounding the problem. Transportation costs have surged by about 30%, increasing the global price of Indian silk at a time when demand is weakening. At the same time, exporters are facing payment delays of 45–60 days, further tightening cash flows across the supply chain.
S. Gangadhar, chairman of the Karnataka Silk Marketing Board, offered a measured assessment of the situation, stating that the industry had not yet suffered major damage because of its reliance on domestic markets. However, he cautioned that if fuel prices continued to rise, export costs would increase further and the sector could begin to incur significant losses.
The economic consequences are already being felt by workers. Karnataka’s garment industry employs hundreds of thousands of women, many of whom are now facing reduced shifts and shrinking monthly wages as production slows. Meanwhile, disruptions to banking systems in parts of the Middle East are delaying export payments, raising concerns that small and medium-sized enterprises could struggle to service existing loans.
With uncertainty in the Middle East showing little sign of easing, industry leaders warn that the ripple effects across Karnataka’s textile economy may intensify in the coming months.
