Demonetisation could not have come at a worse time for Punjab’s textile industry, which relies on the winter season to boost their profits.
In Amritsar, nearly 30 textile processing units have shut down in the past month-and-a-half owing to the cash crunch, an industry body told The Hindu .
These units, which prepare dye and print fabrics, are considered the backbone of nearly 700-800 textile factories that are involved in warp-knitting, embroidery, spinning and weaving.
The closure of these processing units is apparently having a cascading affect on the textile business.
“At least 30 textile processing units in Amritsar have already shut down due to the cash crunch, and the rest of the units are running 25-30 per cent below capacity,” Krishan Kumar Sharma, president of the Amritsar Textile Processor Association, said.
There are about 60 units associated with them.
“If the situation doesn’t improve by December-end, we will approach Prime Minister Narendra Modi and hand over the keys of our factories and ask him to run the business. It has become almost impossible for us to manage our work in the absence of cash,” he said.
Industry players have although appreciated the government’s move of demonetisation of high-value notes, they believe that the poor planning of its implementation has hit the textile industry.
“Production at the processing units has taken a severe blow in this past month. My unit is working 30-40 below capacity, resulting in loss of production by around 35 per cent since demonetisation,” said Kamal Dalmia of Amritsar-based Natraj Wooltex, a leading processor of yarn.
“We need liquidity to run efficiently, but we don’t have enough cash. This has forced many of us to stop our units completely or partially. Not just me, most of the processing units here are working for only four days a week,” he added.
Retrenchment on
Textile industry is a labour-intensive industry and since demonetisation, the industry has been witnessing lay-off because of the reduced business and cash crunch.
“Weaving industry has seen over 50 per cent retrenchment since demonetisation. Most of our daily wage workers have gone back to their native places — mostly in Bihar and Uttar Pradesh,” said I.P. Mahajan, general secretary, Punjab Textile Manufactures Association. He said most of the factory owners are finding it difficult to pay wages to employees as cash withdrawals were restricted.
Also, many manufacturers have reduced the workforce owing to drop in business orders.
Ludhiana-based Vipin Mittal of Kudu Knit Process Pvt. Ltd., who runs a knitted fabric factory, has the same story to share.
“Demand from wholesalers and retailers for the fabric has dipped to an all-time low as most of them are cancelling their orders. In winters, usually we see a rise in sales. But this year, due to cash shortage, retail sales of woollen-based fabric have been hit the most.”
“Supply side has also seen a drop because the processing industries are facing same hardships. If processors won’t supply thread how will we manufacture fabric..It’s a cycle, the impact is cascading,” he added.
Warns govt.
The ATPA has, meanwhile, cautioned that if immediate steps to improve the cash-crunch situation were not taken they will stage demonstrations outside administrative government offices.
The association is demanding to ensure adequate cash supply in the banks and easing the restrictions imposed for withdrawal of money from savings and current bank accounts of industrialists. Besides, interest on bank loans to be waived off for the next six months.
