Israel-Iran tensions hit Gujarat’s solar industry, losses of ₹25,000 crore feared

The impact of global geopolitical instability, particularly the escalating tensions between Israel and Iran in the Middle East, is now being felt on Gujarat’s economy, with the state’s fast-growing solar manufacturing sector facing a major crisis.

Industry estimates suggest that the sector could suffer losses of up to ₹25,000 crore due to disruptions in supply chains, rising raw material costs, and operational challenges.

The ongoing conflict has severely affected the supply of key raw materials and equipment required for solar panel manufacturing, much of which is sourced from Gulf countries. With maritime routes disrupted and shipments delayed, production has slowed significantly in major industrial hubs such as Ahmedabad and Surat.

According to industry sources, raw material prices have surged by nearly 10% in a short span, increasing overall project costs and putting financial strain on companies.

The crisis has also impacted key government-backed projects. Several solar projects being implemented under the Centre’s PM Kusum scheme on a public-private partnership (PPP) basis have reportedly come to a halt. The state government had set a deadline to complete these projects by the end of May, but meeting the timeline now appears unlikely. Industry players are expected to seek deadline extensions and relief measures from the government.

Apart from external factors, the sector is also grappling with internal challenges. A significant number of migrant workers have not returned to work following the Holi and Eid festivals, leading to labour shortages. Additionally, concerns over rising cooking gas and LPG costs have further discouraged workers from returning to Gujarat.

Experts warn that if the geopolitical situation does not stabilise soon, the condition of the solar industry could worsen further. With both supply and workforce constraints mounting, the sector is currently under severe stress and is looking towards urgent policy support to navigate the crisis.