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Prayagraj: Even as the Union government claims that industrial LPG supplies remain largely unaffected by the US-Israel war in West Asia, exporters and factory owners across Uttar Pradesh say there is a crisis and that it has already begun to disrupt production, stall orders and push up raw material and transport costs.

“In Dada Nagar, samosa sales in the evening have dropped to about 25% of what they used to be. It has become difficult to even make samosas due to a shortage of LPG cylinders,” Vijay Kapoor, chairman of the Cooperative Estate in Kanpur, told The Wire. The Cooperative Estate in Kanpur’s Dada Nagar is a consortium of 2500 factories, and has been a registered body since 1959.

On March 26, 2026, Kapoor, along with 44 other Kanpur-based businessmen representing industrial clusters such as Dada Nagar, Panki and Raniya, addressed a press conference. The factory owners – many of whom depend on petroleum-based raw materials – flagged their immediate concerns amid the choking of the Strait of Hormuz, a key point for India’s energy supply.

“Our demand from the administration is that a relief package be announced. Also, if the deadlines for the payment of certain taxes such as GST [Goods and Services Tax] can be extended, it will give us some time to recover,” Kapoor told local reporters, while outlining the impact of the conflict on industries in the city.

According to Kapoor, the ongoing war has severely affected Kanpur’s industries. In the city, which has 17,444 registered industrial units as per government data, about 50% of factories have shut down, another 30% are on the verge of closure, and the remaining 20% are operating at reduced capacity.

Speaking with The Wire, Kapoor, who has also been a member of the Bharatiya Janata Party since 2023, said: “The condition of labourers is really bad. We have been running a community kitchen that caters to 800 labourers daily at Rs 5 per plate.” 

“Prices of petroleum-based raw materials have gone up by 80%. Plastic granules [finely grained plastic particles used in making packaging material, chairs, bottles, refrigerator, syringe, auto parts, etc.] for example, which earlier used to cost Rs 110 per kg are now priced at Rs 180 per kg. What is shocking is that even the cost of packing material has gone up,” he added.

Workers line up at the community kitchen in Kanpur. Photo: Video Screengrab/Akanksha Kumar

 A formal press note dated April 2, following a meeting  of the Informal Group of Ministers (IGoM) set up to monitor the West Asia situation and chaired by Defence Minister Rajnath Singh, stated: “The IGoM was apprised that industrial requirements dependent on commercial LPG are being met, with over 80% of pre-crisis supply levels being maintained to ensure continuity of operations.”

The situation on the ground, however, belies such claims. According to Kapoor, even the Union government’s March 28 announcement of increasing commercial LPG allocation to 70% of pre-crisis levels has offered little relief.

“Yes, they may be supplying around 80% through gas pipeline connections, but piped gas is available only to about 200 factories. Kanpur has nearly 35,000 factories where commercial cylinders are used, and those are not easily available,” said Kapoor.

Most of the factories in Kanpur are reliant on gas-based furnaces for the purpose of cutting and moulding goods. While the recent crisis has forced factory owners to think about going back to electrical or diesel furnaces, businessmen like Kapoor estimate that “even this transition may take time.”

Mirzapur: Carpet exporters grapple with high transport costs

In Mirzapur, carpet exporter Ashis Budhia, too, addressed a press conference on April 2. 

As president of the Mirzapur-Delhi Carpet Association, alarm bells began ringing for the 66-year-old when the trade fair scheduled for April this year got cancelled. “The trade fair has been organised every year by the Carpet Export Promotion Council for the last 30 years but even that was called off this year. If the fair had gone through we would have got business orders worth Rs 100 crore,” Budhia told The Wire.

“The situation is quite critical,” he added. 

Budhia, who is also president of the Indian Industries Association, further added that export orders worth Rs 150-200 crore that were close to delivery have been affected, while fresh orders amounting to around Rs 400-500 crore have not materialised.

While speaking with The Wire, Budhia who has been into the carpet business since 1984, also seemed worried about the escalating costs in transport of consignment due to ongoing war. “Most of our goods usually reach the US and Europe through the Arabian Sea and the Suez Canal. But with the war, consignments now have to take a longer route around the Cape of Good Hope to reach their destination,” he said.

This means the transportation cost per container has risen by $2,000-3,000. “We are in talks with shipping companies to increase fares by a reasonable amount. It has become an ongoing tussle for us,” Budhia told The Wire.

Like factory owners in Kanpur, carpet traders in Mirzapur are also feeling the heat due to a rise in raw material costs. The supply of raw wool from West Asia, which is used to weave carpets, has stopped completely. Meanwhile, the price of New Zealand-branded wool has risen by 50%, from Rs 425 per kg to about Rs 637 per kg.

What has been the ripple effect of this disruption in the supply chain on the weavers? 

“Since 90 percent of the weavers are natives of this area only whether it is Mirzapur or neighbouring Bhadohi district so most of them are in wait and watch mode,” Budhia told The Wire, when asked about any trend of reverse migration visible as is being seen in Delhi right now. 

Exporters in Moradabad and Saharanpur fear order cancellations

Saharanpur-based Pramod Sadana, owner of Sant Exports and national vice-president of the Indian Industries Association, seemed to have a déjà vu moment when the subject of the West Asia conflict was broached.

“Even the US tariffs had led to incurring huge losses. We had then sent a letter to the government regarding alternative markets and participation in subsidised international exhibitions that can boost our business,” Sadana told The Wire. 

In August 2025, the Trump-led administration had imposed a 50% tariff on Indian goods, dealing a heavy blow to sectors like textiles, garments, gems and jewellery, fisheries and leather items.

For Sadana, who has been in the furniture export business since 1998, his biggest fears revolve around orders being put on-hold. “Export oriented units in Saharanpur have a turnover of around Rs 150-200 crores with respect to the gulf countries. Orders related to wooden handicrafts are on hold at the moment,” said Sadana.

“The way the situation is developing we fear that the orders which are on hold may eventually get cancelled,” he added. 

Satpal Pugla, owner of Globe Exports Private Limited in Moradabad, is also apprehensive about orders that have been put on hold.

“Before the war began, a fair had been organised in Frankfurt, Germany. For three days, we interacted with several buyers from the Middle East [West Asia] who had selected samples. So we were hopeful that business would be good this year,” said Pugla, who is also secretary of the Handicraft Exporters’ Association in Moradabad.

“We had even sent photo offers to these potential buyers. Now all our work has come to a standstill,” Pugla told The Wire.

Going by a rough estimate, he said that for a city like Moradabad – which primarily deals in the export of glass artware, wooden handicrafts and steel items – an expected turnover of around Rs 8,000 crore has been hurt by the war, with losses amounting to about Rs 1,000 crore.

Economist warns of possible stagflation

Economist Arun Kumar, who retired as a professor of economics from the Jawaharlal Nehru University, told The Wire: “It is a supply shock created by the shortage of energy across the world, except in countries like Russia, the US or Brazil, which have surplus energy supply. As a result, input costs rise, and it is the small, medium and micro sectors that suffer the most since they do not have deep pockets or adequate working capital.”

Warning about a possible stagflation, Kumar said the effects of the conflict would take time to ease. “This stagflation cannot be dealt with easily by the government because it cannot suddenly create an additional supply of energy. If the war continues like this, the situation will worsen,” he added.

“Even if the war stops in the coming week or ten days, it may take six months to a year to restore production in oilfields that have been affected,” Kumar said.

Hoardings related to state government’s ‘Swadeshi’ initiative in Prayagraj. 

Whither UP government’s ‘Swadeshi’ initiative?

Last year, with the US imposing a new tariff regime on its global counterparts, Prime Minister Narendra Modi had called upon everyone to “adopt the spirit of Swadeshi in a bid to promote indigenous products amidst global uncertainties.” 

Taking a cue from the PM, the Uttar Pradesh government organised ‘Swadeshi Melas’ across 75 districts in order to boost the ‘Vocal for Local’ call by the prime minister. The period between August and October 2025 also saw the state government splashing full-page ads in local newspapers with ‘Swadeshi Se Samriddhi’ and ‘Atma Nirbhar Bharat ki Sashakt Dastak’ slogans projecting a new era of products manufactured in the state. 

These advertisements claimed that Uttar Pradesh’s exports had increased by a whopping Rs 1 lakh crore over the eight years of the Adityanath-led government. Hoardings publicising the ‘Swadeshi’ initiative were also visible in cities like Prayagraj, put up by the UP BJP.

But did these efforts shield the state’s exporters from a global crisis?

“As far as the chief minister is concerned, we are like his children. If we are suffering, the message should reach him,” said Vijay Kapoor.

“Yes, I’m a BJP member, but I’m also an entrepreneur and a businessman. We can’t bear to see things take such a drastic turn,” Kapoor told The Wire.

This reporter reached out to the UP BJP media cell seeking a response on the ‘Swadeshi’ initiative and the current struggles of exporters across the state, but a party spokesperson declined to comment. Calls to the state’s MSME minister Rakesh Sachan went unanswered.

© The Wire