Over 5 lakh workers employed in the readymade garment units in and around Tirupur, the knitwear capital of India, have not been paid wages, following the Centre’s demonetisation initiative. These workers usually get paid an amount of around R3,000 per week. In addition to this, another 2 lakh workers employed in small and medium spinning and weaving mills have also got impacted due to the cash crunch.
Thus a sum of about R200 crore has got stuck, trade sources said. Majority of these workers do not have a savings bank account and 70% of them are migrant workers from the north and north-eastern parts of the country.
Said Raja Shanmugam, president, Tirupur Exporters’ Association (TEA), “There are over 500,000 workers employed in more than 1,200 knitwear/garment units in and around Tirupur and they get paid an average weekly wage of around R3,000. Ever since the PM’s demonetisation scheme has kicked in, we have not been able to draw the required amount. All the garment units have been caught unawares and have requested their workers to understand the grim situation post the demonetisation announcement.”
“However, we understand the need to strengthen the PM’s initiative on black money. We are trying to convince the workers to open bank accounts. We approached the officials of all the banks here and requested them to help workers open a SB account at the earliest with an ATM card. All the banks have come forward and are in the process of opening accounts for workers. We hope the issue will settle in the next few days,” Shanmugam added. The overall production has also got hit, as workers are trying to fit in their banking requirements during the day.
Said M Doraisamy, president of Powerloom Development & Export Promotion Council (PDEXCIL), “It was a horrowing time for workers as well owners. Not only we could not pay weekly wages to workers on time but even we ourselves could not mop up necessary funds from our buyers who too were hit hard by the demonetisation scheme. Small industries like ours do not have enough cash in hand to pay workers regularly. It has been a nightmarish experience for the last few days.” He felt enough precautionary steps should have been put in place, before a massive move like demonetisation was initiated.
K Selvaraj, secretary-general, Souther India Mills’ Association (SIMA) told FE that there was a 15-20% decline in the offtake of yarn from spinning mills in the last few days due to cash crunch. Most of the buyers pay cash to get their stocks delivered. The Centre’s move has impacted the mills in a number of ways, including payment of logistics costs, workers’ wages, cotton purchase and other daily cash-based activities. “Nobody is critising the PM’s decision, but some measures should have been taken to help small industries to tackle the situation better,” Selvaraj further said.
A Sakthivel, former president of TEA and chairman and managing director, Poppy’s Knitwear Limited said it is a major task to ensure continued and smooth production in days to come. “Hopefully the workers will open bank accounts soon and things will return to normal with enough cash in the banks,” he added.
However, the Tirupur Exporters Association does not see any impact on the export front at this point of time. It has already achieved more than R12,500 crore in exports as of September end this year. Last fiscal it had netted a little over R23,000 crore through exports.