Are natural dye-based textile enterprises economically sustainable? Evidence from Assam, India

Natural dye-based textile production is increasingly promoted as an environmentally sustainable alternative to synthetic dyeing. However, its economic sustainability and livelihood implications remain underexplored, particularly in place-specific contexts. This study examines the financial performance, operating risk, and efficiency of artisan-managed natural textile dyeing enterprises in Assam, India—a region characterized by rich biodiversity, long-standing dyeing traditions, and rural livelihood dependence on small-scale production systems. Drawing on primary enterprise-level data from lac and indigo (rom) dyeing units, the study employs an integrated analytical framework combining cost–volume–profit (CVP) analysis, regression modelling, and Data Envelopment Analysis (DEA). The study is based on primary data collected from 150 enterprises, and econometric estimations were conducted using Stata 17. The results show that natural dyeing enterprises are economically viable, exhibiting high gross profit and contribution margins, low break-even sales, and substantial margins of safety, indicating limited operating risk. Regression analysis reveals that profitability is driven by contribution margin, scale of operation, and technology type, while labour cost intensity negatively affects financial performance. DEA results indicate higher technical and scale efficiency among indigo dyeing enterprises, whereas inefficiency among lac dyeing enterprises is largely attributable to sub-optimal scale. A positive relationship between technical efficiency and profitability further highlights the role of efficient resource use in strengthening enterprise resilience. By integrating financial performance, efficiency, and risk analysis within a place-based empirical framework, the study contributes to debates in economic geography and socio-environmental sustainability. The findings demonstrate how environmentally benign, traditional production systems can support resilient rural livelihoods when embedded within appropriate efficiency-, scale-, and productivity-enhancing strategies.