Surat's Textile Traders Navigate Between Old Business Models And New Consumption Patterns

Erratic climate, competition from e-commerce platforms, and the consumption pattern of Gen Z force Surat's textile MSMEs to reevaluate their business model. It is now imperative for manufacturers to reorient their strategy, say industry voices

Dec 16, 2025 · 4 min read

Textile micro, small, and medium enterprises, MSME, MSMEs, Surat, Gujarat, Gen Z, Surat Mercantile

It is the moment of reckoning for the textile micro, small, and medium enterprises (MSMEs) in Surat, as erratic climate, competition from e-commerce platforms, and the consumption patterns of Gen Z have forced them to reevaluate their business model. "The sales in the southern States after Diwali were only about half this year, as compared to the previous year. The demand was relatively low this year,” says Narendra Saboo, president of Surat Mercantile Association (SMA).

The textile sector in Surat is estimated at ₹2,00,000 crore annually.

Business Model Overhaul

A section of textile traders stresses the need for an overhaul of the business model, while the rest of them tread the conventional path, with hopes of normalcy in trade. Natural calamities and a shift in consumption patterns triggered by Gen Z have contributed to a decline in sales.

Arvind Vaid, a textile trader, said that a similar situation prevailed in the northern States, too. “We are clueless. Despite the wedding season, there is not much demand. When we talk to wholesalers, they say that there are no fresh orders from retailers, as the goods previously supplied to them are unsold,” said Vaid, who attributed this to the emergence of online shopping. “Online shopping has caused a 20%-25% dent in the traditional business,” he remarked, adding that processing units in Surat were working at partial capacities due to subdued overall demand.

Demand For Apparel

The festive months from August to October register a consumer demand for apparel. The GST rollback, which was effective from September 22, 2025, led to a "frenzied buying trend" in the run-up to Diwali, but its impact on the garments sector was only marginal. The wedding season, too, has not brought in good sales.

Kailash Hakim, Managing Director of Surat-based Himanee Group, attributes the downward trend to the changing business dynamics and the lack of willingness of local businessmen to adapt to the circumstances.

Over the past many years, consumers have shifted to branded and luxurious products. Gen Z consumers would buy fewer branded garments. It is difficult to say whether overall consumption has fallen. However, one can say with certainty that the share of our products in the consumption basket has fallen. Many consumers have bought gold, silver, and ornaments, reducing their impulsive spending on clothing

– Kailash Hakim, Managing Director, Himanee Group

It is now imperative for manufacturers to reorient their strategy to suit the demands of the new-age market, he says, adding that the forward integration towards manufacturing garments and export is the remedy to get rid of the current deadlock.

“Surat and Ahmedabad do not have major global apparel brands. Moreover, our products are targeted at the domestic market. Unless we expand our horizon, our production will be stuck. We need to diversify the garments and exports,” he pointed out.

Garments have a share of close to 3% in Surat’s textile sector.

Hakim's observation of a drop in the demand tallies with data from the Index of Industrial Production (IIP) for the month of October 2025. The index for textile manufacturing for the April–October period stood at 107.3, as compared to 108.2 for the same period in 2024, indicating a drop of 0.8%. For FY2025-26, it remained within 107 and 111, indicating a stagnation in the sector.

IIP For Apparel Sector

Similarly, the IIP for the apparel sector dropped sharply by 2.4% (at 108.4), as compared to 111.1 for the same month (October) in the previous year. The IIP for the April–October period grew marginally at 0.4%, from 111.9 in 2024 to 112.3 in 2025. However, manufacturing in October dropped drastically by 6.1% a year ago.

Industry players say that this is because of the fall in consumer demand. “People are not buying; so, retailers, wholesalers, and distributors do not have the money to pay the sellers. The payment cycle, which is normally 90-120 days, is now 250-300 days; so, there is no incentive to produce more. Unsold garments are being returned. SME traders are facing an existential crisis,” said a textile processor, on condition of anonymity.

Stagnating Production

An office-bearer of a top national textile body said that the stagnating production was a result of overall business uncertainty, indicating manufacturers’ low confidence in the market. Uncertainty dents the spirit of businessmen, he said, requesting anonymity.

Hakim, however, says that his advice for a massive forward integration into branded garments and exports fell on deaf ears. “We earned a lot in 20 years by selling fabrics and unbranded garments. This model is no longer working. Despite a shift in consumption dynamics, our businessmen are not ready to listen. They acknowledge that their market is shrinking, but are not ready to mend their ways,” he said.