Demonetisation and industrial woes

A tale of contrasts in the garment industry

bearing the brunt: The cash crunch has put the brakes on consumer demand for new jeans, and subsequently, production in factories have fallen. — file photo   | Photo Credit: M_Balaji

The financial tsunami — the demonetisation drive — has hit many of the small garment units in the State.

An estimated 250 small garment units are spread across the arid landscape of Ballari. From here, workers churn out trousers and jeans, primarily under local brands for Hyderabad, Chennai, and Mumbai. The cash crunch has put the brakes on consumer demand for new jeans, and subsequently, production in factories have fallen. “There are very few orders for us. Our business has dropped by 70 per cent,” says H. Mallikarjun, who runs a factory with over 100 workers. In this relatively-backward district, a majority of the employed workers do not have bank accounts. “Barely one in five workers say they have an account. The remaining have to be paid in cash. On an average, each one has to be given Rs. 2,500 per week, but the limit on the amount I can draw from banks is Rs. 50,000,” he said.

Demonetisation has hit the estimated 10,000 workforce that contributes immensely to the local economy. “This is a seasonal market and during this time, demand should rise due to upcoming festivals such as Christmas, New Year, Ugadi, and Pongal. But owing to cash crunch, the market is down,” said Lucky Shah, president of the Ballari Garment Manufacturers’ Association.

In tier-II towns

Devaki Yoganand, who runs an export manufacturing factory in Hubballi as well as an associated factory outlet, says her clients — primarily marketing to the domestic sector — have asked their factory to scale down production by 40 per cent. Meanwhile, sales in the retail outlet has dipped by 75 per cent.

“Flow of fabrics and raw material have been impacted, while clients say sales have reduced. Paying workers has also become a huge headache as some do not have bank accounts. With lowered production, neither can I allot them work, nor can I fire them,” she said, adding that demonetisation had come at a season where a large number of orders due to weddings and festivals are placed. “Exporters are booked through to 2017. We, however, will continue to suffer for a year because of this,” she said.


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Printable version | Dec 4, 2021 7:38:03 PM | https://www.thehindu.com/news/cities/bangalore/A-tale-of-contrasts-in-the-garment-industry/article16792612.ece

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