The ‘Silk City’ of India, Surat, looks poised to lose its sheen in the wake of the recent demonetisation of R500 and R1,000 notes by the Centre. The city’s power loom sector has already clocked losses amounting to R800 crore and they are mounting by the day.
Ashok Jirawala, president, Federation of Gujarat Weavers’ Association, said, “This has been a deadly decision by the government. The circulation of money has stopped but who will do the work now? Everyday, we are making crores of losses and even after a year, it is going to be difficult for businesses to sustain themselves.”
According to Jirawala, production in the textile sector has halved since demonetisation came into effect. “Earlier, there was production of four crore metres of cloth per day. Now, after this move by the Centre, production has fallen to two crore metres per day. This is bound to drop even further,” he said.
A largely unorganised sector, Surat is home to 50,000 power loom units, another 40,000 units for value addition and about 400 dyeing units. Jirawala estimated that about 10 lakh workers are directly or indirectly employed within the textile sector in Surat, which is also a major hub for the diamond trade in the country and overseas.
Talking to FE, Jirawala said, “Each unit in Surat employs about 200 workers who have to be paid their salaries twice each month. Every month, owners of textile units end up spending at least R12 lakh for the salary of their workers. With the limit on withdrawal, how are we supposed to pay our workers? The government should be encouraging trade, but right now we are just making crores of losses daily.”
Traders in Surat have submitted a memorandum to the collector in this regard. Jariwala added that the Vyapari
Mahasangh in Surat, which includes traders from all sectors including textiles and the diamond industry, would soon send a delegation to make representations to the government.
Ahmedabad, formerly called the ‘Manchester of the East’, has also seen trade fall by 80%. Sources indicate there is a 25% cash component within the textile sector, especially in retail. Arpan Shah, senior vice-president, Gujarat Garment Manufacturers’ Association, said,
“Manufacturing has also been cut down by almost 70%. Diwali vacation ended for the textile industry, and trade has not picked up at all. Many people are unable to understand the situation, and a lot of orders are being cancelled.”
Traders in Ahmedabad, which is home to at least 17,000 textile manufacturing units, have adopted a ‘wait-and-watch’ outlook towards the demonetisation move.
Shah said, “This is a good move for the economy definitely because as people move towards plastic money, their purchasing power will grow which is good for business in general. The situation right now is bad, but everyone expects it will improve in about a month or so.”
According to data available with the textile commissioner’s regional office in Ahmedabad, Gujarat is home to 144 composite mills, including those for spinning, 897 cotton ginning and processing units, 22 surgical cotton units, 2,362 units for processing of readymade garments, 362 units for technical textiles, 513 power processing units and 1,146 hand processing units, of which 95% are located in Rajkot.
Additionally, Gujarat has 60 home textile units and 5,053 preparatory units for weaving.