I truly don't think it will dry up, because some of the distilleries will remain active. Perhaps the distilleries could have been more forward-thinking and used some long range planning for alternative uses for their kewda oil, but often industries fail on the human end of the planning processes. Kewda flower water and oil are used in Indian pastries, but that small part of the yearly harvest will not, even coupled with the perfumery industry, be enough to keep the hundreds of distilleries going.
Perhaps the growers and distillers should have come up with a plan B after the steel industry takeover failed. They might have figured out ways to avoid being boxed into a threatening scenario such as the one they have now.
The gutkha practice sounds frightening, and perhaps the Indian government is wise stepping in, but I do hope they have some alternative plan for the kewda industry, because taking away the livelihood of thousands of people can be as damaging to the health of the affected people as gutkha is to the addicts.