MUMBAI (Commoditiescontrol) – The currency demonetisation has paralysed the denim fabric manufacturing industry, as 50 per cent capacity has reportedly shut down. Known to be the sunrise industry of India, it has been growing at a healthy 15 per cent CAGR over the decade. Currently, the industry has an annual installed capacity of 1.4 billion meters, supposedly the world’s second largest after China. The turnover is estimated at around Rs 15,000 crore and provides employment to about 400,000 workers, besides indirect employment.
Denim fabric is washed before it is marketed, these upstream activities are majorly done in the unorganized sectors located in the SSI hubs of Gandhinagar and Tank Road, Delhi, Ulhasnagar in Mumbai and Bellary near Bengaluru. Since these hubs mainly deal in cash, they have shut down due to the cash crunch. As 85 per cent of the fabric is sold in domestic market, they are badly hit.
Experts fear, since upstream activities of garment sewing and washing in SSI hubs will take some time to run smoothly with the banking system, they are not foreseeing any short-term recovery of the market in the near future.
This has led to shutdown of denim mills resulting in a loss of jobs. Considering the grave situation of the denim industry, it is likely that the government may announce immediate enhancement in present duty drawback rates and also extend some more benefits under focus product and focus market scheme so that mills can competitively try to shift to the export market.
(By Commoditiescontrol Bureau; +91-22-40015522)
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