In India, Firozabad has depended on its glassmaking
industry for centuries. Fuel prices are starting to shatter businesses already under
pressure.
·
Energy
Shock Reaches India
o Conflict near Iran disrupting oil and gas
flows via the Strait of Hormuz
o India, a major energy importer, faces rising natural gas prices and shortages
·
Firozabad
Glass Industry Hit Hard
o Firozabad produces ~70% of India’s glass
o Factories depend on imported natural gas;
coal banned since 1996 to protect the Taj Mahal
o Up to 1 million livelihoods at risk
·
Production
Disruptions
o Gas shortages forcing factories to cut output or shut furnaces
o Continuous furnaces (≈2700°F)
require massive daily gas supply
o Glass scrap piling up as melting becomes
too expensive
·
Economic
Impact
o Industry worth $1 billion annually,
including $200 million exports
o Prices of products like bangles up ~30%
o Supply shortages affecting sectors like
beverages, automobiles, and healthcare
·
Employment
Crisis
o Workers losing jobs or facing reduced
workdays
o Labor-intensive sector critical for
absorbing India’s ~9
million annual workforce entrants
o Risk of permanent labor loss
if layoffs continue
·
Structural
Challenges
o Competition from China’s advanced,
electric-furnace-based glass industry
o India’s unreliable power grid limits shift
to electricity
o Thin margins worsen vulnerability to fuel
price shocks
·
Spillover
to Other Industries
o Ceramics hub Khurja
also impacted
o Up to 98% of kilns temporarily shut due to fuel
costs
o Government allowed diesel use (normally
restricted) to revive production
·
Social
Unrest Rising
o Worker protests in parts of Uttar Pradesh
over wages and conditions
o Inflation and job losses increasing
economic stress
·
Broader
Concern
o Energy crisis threatens India’s manufacturing competitiveness
o Disrupts supply chains and weakens labor-intensive industries
o Highlights vulnerability of globalized
production to geopolitical shocks
·
Overall
Insight
o A distant geopolitical conflict is
triggering a local
economic and employment crisis, exposing deep links between
energy security and grassroots livelihoods in India
Far
from the war in Iran, disruptions to oil and gas flows are rippling through Uttar
Pradesh, an Indian state more populous than Brazil. Manufacturing clusters with
specialized supply chains dot its crowded countryside. Each district specializes
in a trade: brass in Moradabad, leather in Kanpur, carpets in Bhadohi and glass in Firozabad.
Now
in Firozabad, glass factories that rely on imported natural gas, mostly from the
Persian Gulf, are exposed to shortages and high prices. At risk are the livelihoods
of up to one million people who rely on glassmaking for employment.
The
factories in Firozabad, just 21 miles from the Taj Mahal, have been barred from
using coal-fired furnaces since 1996 to protect the monument’s white marble facade.
In
the city, hundreds of small and midsize firms produce everything from bottles and
beads to chandeliers and headlights, generating more than $1 billion in a good year,
including $200 million in exports.
The
stakes go beyond the city. India’s economy is now among the world’s largest, just
behind Germany and Japan, yet unemployment remains stubbornly high. Labor-intensive
industries like glassmaking are critical to putting more people to work and to turning
the country’s vast work force into a competitive advantage. The challenge is growing,
with roughly nine million young people entering the labor
market each year.
India
is the world’s third-largest importer of oil and gas, and as its economy grows,
so does its import bill. Early in the war in Ukraine, refiners turned to discounted
Russian crude. But after pressure from the Trump administration to cease buying
from Russia, they reverted to traditional suppliers: Iraq, Saudi Arabia and other
countries that depend on shipping through the Strait of Hormuz.
Here,
the impact is not felt at the gas pump. The Indian government keeps diesel and gasoline
prices stable, and few locals own cars. However, shortages
and soaring natural gas prices threaten factory work that has endured for centuries.
Firozabad’s
glassware tradition dates to the 16th century, when the Emperor Akbar had Mughal
trinkets recycled in a local furnace. Today, a thousand trucks filled with broken
glass arrive daily from across India and beyond. Since March, mountains of shards
have piled up untouched, because melting them down has become too expensive.
Even
before the energy crisis, the industry was struggling. Local glassmakers were losing
ground to Chinese competitors with more advanced factories. Most Chinese glassmakers
use electric furnaces, an option largely out of reach for most businesses in Firozabad.
In addition, India’s grid is not stable enough to deliver reliable and affordable
electricity to those operations. As oil prices rise, China’s cost advantage only
widens.
It
has been three decades since Firozabad experienced a major energy crunch — when
measures to protect the Taj forced a switch to gas. At that time, only one-third
of the glass factories survived the transition.
In
Firozabad’s traditional bazaars, the scene still looks abundant. Cycle-rickshaws
loaded with blank, undyed glass nudge past towers of brightly colored bangles as wholesalers fill the shops.
These
bangles, sold for as little as 2 cents a piece, may be
among the world’s cheapest objects of joy. Even before the crisis, margins were
thin. Now prices have climbed about 30 percent.
Mukesh
Bansal, a local glassmaker and vice president of the All India Glass Manufacturers’
Federation, has kept his workers on payroll. But with gas in short supply, he has
been forced to nearly extinguish one of his two furnaces. By April, his factory
would have normally started making Christmas ornaments for export to the United
States. This year, it hadn’t.
The
furnaces in Firozabad, which produce about 70 percent of India’s glass, must burn
continuously at around 2,700 degrees Fahrenheit. This requires thousands of kilograms
of gas daily.
“We’re
not part of the war, but we’re bearing the brunt of it,” he said.
The
strain is spreading to buyers. Suraj Mehta, chief strategy officer at Hindusthan National Glass & Industries, said glass bottles
had become “harder and more expensive to procure” across India in the past two months.
Glassmakers are absorbing about half the increase, passing the rest on to brewers,
soft drink makers, auto repair shops and medical suppliers.
Binni
Mittal, president of Industrial Estate Cooperative Society in Firozabad, owns a
bangle factory, employing hundreds of workers who heat, shape and cut orange-hot
glass into bangles. His usual gas supply has fallen 20 percent, forcing him to scale
back output 40 percent.
From
an air-conditioned cabin beside his furnace, Mr. Mittal has watched gas costs climb.
Supply has held, but prices have swung sharply.
“If
the war continues like this,” he said, “our industry will get destroyed.”
Before
the war in Iran, Mr. Mittal’s biggest problem was a labor
shortage. Now he worries that laying off workers might mean he will lose them permanently,
even if energy prices return to normal. In the past, he would have hired legions
of workers, but the work is so punishing that few families want their sons to do
it. Last month, it was 108 degrees Fahrenheit in the shade and far higher near the
furnaces.
He
is no longer hiring.
At
an open-air labor market in Firozabad, Saddam Hussein,
a 32-year-old glass cutter, waited for work. He used to support his wife and three
children on wages of about $6 a day. In the past month, he has found only four or
five days of work.
“The
war is over there, but we’re getting killed here,” he said. “When I don’t get work,
my family goes hungry.”
As
conditions for workers worsen, there is growing discontent.
A
few weeks ago, thousands of electronics workers took to the streets in parts of
Uttar Pradesh adjoining New Delhi to protest wages and working conditions. Factory
gates were overrun. Police officers fired tear gas and arrested hundreds. Many complained
that wages had been falling behind living costs even before the energy crisis drove
up the price of essentials like cooking gas.
Other
industries are also feeling the squeeze on energy and employment. In Khurja, about 50 miles southeast of Delhi, artisans have been
making ceramics since medieval times.
“Fuel
is the main part of our product,” said Shalabh Singhania of R.K. Potteries, estimating
that it accounts for 30 to 35 percent of costs. His kilns run at lower temperatures
than glass furnaces, which allowed him to shut them down for the month of March
without ruining them.
The
business is labor-intensive. “One mug crosses the hands
of 30 laborers,” he said. He hesitated to furlough workers, because most had traveled long distances for work and would rarely return if
they left.
He
estimated that at one point, 98 percent of Khurja’s kilns
had shut down. They reopened only after the government allowed them to burn diesel,
normally banned to curb air pollution in Delhi. While his factory makes housewares,
others in Khurja produce ceramic insulators for India’s
expanding power grid — a sign that the energy crunch is also constraining the materials
needed to ease it.
Industries
like Mr. Singhania’s depend on tightly linked networks of cooperation among owners,
workers and buyers. “If one link breaks in this chain, the whole chain breaks,”
he said. “The chain is already breaking.”