Impact of demonetization on textile industry – Tiruppur Case Study

What is the issue?

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