Impact of demonetization on textile industry – Tiruppur Case Study

What is the issue?

• November 8^th marks one year anniversary since the Demonetisation.
• It specifically had an impact on Textile Industry

Click here to know about Impact of Demonetisation after an year

What is the present scenario in Tiruppur SME?

• Tiruppur is a town in Coimbatore district of Tamilnadu.
• It has textile hub which worth’s Rs 42,000 crore.
• It is sustained by 8,500 small, medium and large firms.
• There were 1,500 small units in the periphery of tiruppurbefore the note ban.
• A small stitching unit would employ around 15 women workers and made an average of Rs 20,000-25,000 every week.

What are the impacts of demonetization?

• Tiruppur industries belong to the micro- and small-scale category, and have not been able to bear the double blow of demonetisation and GST.
• After demonetization fewer than 500 small units are still doing regular business.
• Others are either shut or have been waiting for an order for several months now.
• On an average remaining workers at the small units is only around 5 and they struggle to make average of Rs 2,000 in two weeks.
• They people who run the unit can’t pay the Goods and Services Tax (GST) on the raw material what they use.
• As there is nothing left after stitching, transportation, buying other materials and paying loans.
• To sustain the labours, the units pay them even if there is no work.
• The competitors in markets in the United States and the European Union had gained by 10%-11% in this period.
• Big players are also badly affected by the demonetisation and have stopped outsourcing (cloth) bundles for stitching works.
• The industry is literally being wiped out, reviving it would be impossible.

Source: The Indian Express