MUMBAI (Commoditiescontrol) – The 112-year old textile hub of Ichalkaranji, which is already reeling under severe demand constrain, has been further affected by the government’s recent decision to demonetize high currency notes. Ichalkaranji is home to nearly 5,000 textile factories, India's largest centre of small-scale industries and has as many as 200,000 power looms employing 300,000 workers. Another 15,000 are dependents on this industry, which churns out textile goods worth Rs100 crore a day.
With over 20 modern spinning mills, the region has become one of the major centre for spinning mills in India. Some of these spinning mills are 100% Export Oriented Units of cotton Yarn. Yarn sizing, a preparatory process before weaving, is done by about 175 units, working 24 hours a day, 6 days a week. However, large number of textile units fall in the cooperative sector, a trend that began in 1904.
Recently, the textile hub was up in arms over receding demand from China. Mills had cited errant government policies and loss of business due to the crash in the China market - a major yarn buyer. The mill owners were demanding a reduction in power tariff, subsidy for exports and soft loans for short term so that they can pay wages to workers. A national daily quoted, SB Bauskar, executive director of Textile Federation of Maharashtra, saying that the textile sector was facing huge crisis and most spinning mills had no orders for yarn and incurring huge cash losses. Shutting down spindles was the only option to prevent further losses. Despite several requests the government neither reduced power tariff for textile sector nor offered any other monetary support to cooperative mills. Basically, the industry is seeing recessionary pressure looming over.
Close on the heels comes demonetization, which gripped the entire industry. Not only spinning mills, even weaving, sizing and process houses are facing tough time. Most power looms in Ichalkaranji are shut for the past 20-30 days and fabric prices have fallen dramatically since payments in cash have stopped due to currency crunch. In just 20 days the daily turnover has plummeted from Rs 45 crore to Rs 13 crore as traders are cancelling orders unless the mills accept payment in demonetised notes. Bulk orders are cancelled and transportation of raw material delayed resulting in millions meters of cloth lying at power looms.
More than 80,000 workers engaged in looms, sizing and processing units are leaving the hub as wage payment is deferred. Most of these workers are from Uttar Pradesh and Bihar.
Transportation too have taken a big hit. Ichalkaranji cloth is sold in Rajasthan, Gujarat, Delhi and Mumbai. Normally around 50 trucks are loaded daily in this season, and this has come down to a mere 4-5 trucks.
According to the Ichalkaranji Powerloom Weavers Cooperative Association, the industry which was already struggling because of stiff competition, and with the government's note-ban policy, they are completely crippled.
Sources said that those manufacturers committed in forward deals are operating while others have shut or operating in lesser shifts. Activity was dull due to recent Nagar Palika election. Many expect normalcy to return soon, but demand remains weak. Ichalkaranji fabric has good demand from Balotra, Rajasthan but is fast shrinking. Further price disparity is squeezing weavers’ margins.
In a recent election rally, Maharashtra Chief Minister, affirm that textile is a big industry with links to agriculture and a large employment generators. He assured that the industry has full backing of the government and will not allow it to fall any time.
(By Commoditiescontrol Bureau; +91-22-40015522)
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