On Saturday, associations representing small-scale detergent manufacturers in Gujarat revealed that approximately 80% of their roughly 850 production units have ceased operations. The remaining facilities are also expected to shut down soon, as they are running low on raw materials and facing skyrocketing costs that have made production economically unviable.
The Gujarat Small Scale Detergent Manufacturers Association, along with the Soap and Detergent Association Gujarat, cited a significant increase in the price of LABSA (Linear Alkyl Benzene Sulphonic Acid), a key ingredient in detergents. The price surged from Rs 105 in November 2025 to Rs 135 in February 2026, and then skyrocketed to Rs 300 per kg in March due to escalating tensions between the US and Israel on one side and Iran on the other, which resulted in a blockade of the Strait of Hormuz. This blockade has curtailed approximately 20% of the global oil supply.
In addition to LABSA, the costs for other essential materials such as Soda Ash and plastic packaging have also risen significantly, placing immense pressure on the industry. Shutdowns began on March 15, with 80% of production units halting operations by April 11.
Naresh Jain, Chairman of the Gujarat Small Scale Detergent Manufacturers Association (GSSDMA), described the current scenario as a critical threat to the sector. “We are encountering significant challenges in sourcing LABSA, which is vital for detergent production. The prices of this raw material have escalated so dramatically that businesses cannot afford to purchase it at the current rates, as they cannot sell the finished products at matching price points. This situation has forced 80% of our industry to close its doors, leaving only those with existing stocks operational until their supplies run out,” he explained in an interview with The Indian Express.
Jain elaborated on the pricing issue, noting, “Previously, we were able to acquire LABSA for around Rs 135 per kg. However, following the outbreak of conflict in the Middle East, prices have climbed to Rs 300 per kg. Additionally, the cost of Soda Ash has increased by Rs 6,000 per tonne, and plastic packaging costs have risen by 50%. Earlier, we could sell 200-225 grams of detergent for Rs 10; now, we struggle to offer even 125 grams for the same price.”
The supply chain for the detergent industry involves producing the petrochemical Linear Alkyl Benzene (LAB) at refineries using kerosene and benzene, primarily manufactured by companies such as IOCL, Nirma Ltd, and Reliance. This LAB is then sold to sulfonators, where it undergoes a sulfonation process using sulfuric acid to create LABSA, which is subsequently supplied to detergent manufacturers.
In detergent production facilities, LABSA is combined with Soda Ash, Silicate, and fillers to create the final detergent product that is marketed to consumers.
The small-scale detergent manufacturing sector in Gujarat employs around 30,000 workers and holds a 60% share of the rural market, alongside a 15% share of the urban market, which is largely dominated by larger corporations and multinational companies.
The cost of producing detergent cakes is estimated to be between Rs 25,000 and Rs 28,000 per tonne. When factoring in an 18% GST, as well as packaging and transportation expenses, the price for consumers reaches approximately Rs 40,000 per tonne or Rs 40 per kg.
The associations are calling on the government for assistance, proposing that a 20% to 30% quota of essential raw materials be allocated specifically for micro, small, and medium enterprises (MSMEs) to revitalize the industry. They also anticipate that LABSA manufacturers will respond compassionately by providing materials at reasonable rates. Without a prompt resolution, they warn that the upcoming Diwali festival could bring hardship to thousands of workers in the sector.
