MUMBAI (Commoditiescontrol) – It appears that textile industry had felt the heat of demonetization policy of the government of 8 November. Textiles production, as indicated by the Index of Industrial Production, released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, declined 7.1 per cent (YoY) in December 2016, when the cash crunch severely disrupted trade and business. While textile products output declined 6.6 per cent, wearing apparel production fell 8.1 per cent during the month. November was partially affected although textiles production was up 2.8%.
Textile production is largely organized with close to 80 per cent from corporates while the rest produced by the households. Thus, the impact of demonetization supposed to be minimal on textile production. Yarn production data released by the Textile Commissioner Office also corroborates with the IIP estimates which pegged yarn production down 4 per cent in December.
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Production was largely affected by the disruption in related services like transport and majorly the raw material supply which is largely unorganized. Farmers were reluctant to sell their produce without cash while ginners held back stock in anticipation of higher prices during the lean season. The organized textile production sector that has close connection and depends largely on unorganized supplying sector, cannot remain un-escaped.
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