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In red since last two years, Indian textile sector is shaken by demonetization

Thursday March 9, 2017 11:33 AM, Aleem Faizee,

Textile India
[Market insiders said the weavers incurred losses amounting to millions of rupees in the last two months post demonetization, and it will take years for the situation to become normal and back on track. ( photo)]

Mood in textile industry was upbeat this Diwali. For, after two successive poor monsoons, more than the normal downpour last rainy season had infused fresh blood in the textile sector which was reeling under intense pressure since Jan/Feb 2014.

November 08, 2016 however changed everything. Shock, disbelief and uncertainty were writ large upon every face. Dreams of the weavers who had expected to regain the lost ground were shattered. Markets abuzz with hectic activities till now wore a deserted look. Over 1.5 million looms came to a standstill, and hundreds of thousands of laborers were left jobless. This was when Prime Minister Modi took the sudden decision to demonetize rupees 500 and 1000 old currency notes.

“The immediate impact of the demonetization was shock and disbelief. We were unable to comprehend from where we will get the cash the industry needed to run the routine business”, Nehal Ansari of Taj Textiles, Malegaon said.

Same was the case in Bhiwandi.

“The textile industry basically runs on cash. As it needs a huge transaction every day, mostly in cash, it is next to impossible to run powerlooms without cash”, Javed Ansari of Bhiwandi Powerloom Federation said. 

Unlike Ichalkiranji where monthly salary is a norm, labourers in Bhiwandi and Malegaon are respectively paid fortnightly and weekly wages. It means the two largest textile clusters which host more that 50% of India’s power looms would need a huge amount of cash every week and fortnight.

“It was suicidal to run power looms under such a situation. It means hiring labourers without assuring them the wages. You can do such thing for some time. But, not for weeks and months”, Ansari added.

The result was that the power loom units known for their 24x7 work cultures started shutting down one by one. It led to the exodus of labourers, mostly from Bihar, Uttar Pradesh, Assam and West Bengal.

“We have come here for work leaving behind our families in our home towns. We live in shared rooms and take food from local bissi centers. Every fortnight when we are paid wages, we pay part as room rent and food charges and the remaining to our kin back home.

“This is the cycle in our routine life. If this cycle is disturbed, we will be left without shelter and food”, Shahensha Khan, a labourer who came from Bihar, said.

Market insiders said the weavers incurred losses amounting to millions of rupees in the last two months post demonetization, and it will take years for the situation to become normal and back on track.

“The industry has been thrown behind by many years due to demonetization”, Nehal Ansari said.

Interestingly, this is the season which normally sees a huge demand of cotton fabrics in the market. But, even as the industry struggled to come out of the shock of demonetization, shortage of cotton yarn forced the industry in reverse gear once again.

“This is the period when fresh cotton comes in the market and prices are normally between 32,000 to 35,000 per candy of 355 kgs. But, today the cotton despite good output is selling at 43,000 to 45,000 per candy. As a result, cotton yarn prices are skyrocketing and weavers are unable to match the price of their fabrics with the one in the market”, Sharique Zubairi of Suhana Textiles, Malegaon said.

From January/February to the next 3-4 months normally there is a huge demand of cotton fabrics mainly because of two reasons. One the upcoming marriage season and second is the summer when people prefer cotton fabrics.

“Had there been adequate supply of cotton yarn these days, the weavers would have definitely recovered some losses incurred due to demonetization”, Zubairi said.

Meanwhile, polyester continues to be under pressure due to 30% anti-dumping duty imposed on imported synthetic fibers. There was hope and anticipation when Textile Minister Smriti Irani promised in August 2016 during a meeting with stakeholders that she will take up the issue with the Commerce Ministry and will try to find out a solution beneficial for the industry.

Irani repeated her assurance after she visited Bhiwandi a couple of months ago.

“Five months have passed and we are yet to hear from the Ministry of Textiles if it has taken any decision over Irani’s assurances”, Rashid Tahir Momin, former MLA and himself a weaver who was present in the meeting, said. 

Failing to get any positive response from the Textile Ministry, the weavers anticipated that the Union Finance Minister Arun Jaitley would announce some measures to bring the struggling textile sector – second largest after agriculture, back on the right tracks. They were however disappointed as the General Budget 2017-18 had hardly any mention of the Textile Sector.

Then came yet another assurance from Textile Minister Smriti Irani. When the issue of the struggling Textile Industry was raised in the Parliament in the first half of the budger session, Irani said "she has some good news for the sector. But, they could be made public only after the election process in the five states are over".

The Pariament resumes session today and the election process in five states have also been wrapped up. The weavers now again look at Irani to know the "good news" she had promised in the first half.

{A version of this article is published in Textile Value Chain January issue. Aleem Faizee, Founder Editor of, is also Founder Secretary of Malegaon Industries & Manufacturers Association (MIMA). MIMA has been instrumental in the establishment of a Mini Textile Park in Malegaon. He can be reached at]


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