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Mumbai, Bhiwandi & Ahmedabad: Since the turn of the century, Bhiwandi – once called the Manchester of Asia – has wilted against competition from Bangladesh and Vietnam. Bhiwandi holds more than a sixth of India\'s 6.5 million power looms – machines that manufacture fabric from yarn.
Mumbai, Bhiwandi & Ahmedabad: Since the turn of the century, Bhiwandi – once called the Manchester of Asia – has wilted against competition from Bangladesh and Vietnam. Bhiwandi holds more than a sixth of India's 6.5 million power looms – machines that manufacture fabric from yarn. A congested city of about 1.5 million, 30 km north of Mumbai, it was once a key link in India's cotton economy, which employs 25 million workers alone, the second-largest employer after agriculture.
Left in tatters
- Textiles contributes 2% to India's gross domestic product.
- Decentralised power loom, knitting form largest components
- Textiles are the largest creator of formal sector jobs
- As sales dropped, workers could not get salaries
- Whole supply chain is hard hit as cash is dried out
The Indian textile industry is already challenged by falling exports, low productivity and rising prices. Bhiwandi has now been further crippled by the aftermath of the November 8, 2016, scrapping of 86 per cent of bank notes, by value. "Notebandi ne humko paanch saal peeche fek diya(demonetisation threw us five years behind)," said Asad Farooqi, 65, who has been running more than 100 power looms for about 30 years.
The textile industry, of which decentralised power looms and knitting are the largest components, contributes 2 per cent to India's gross domestic product. Maharashtra, with more than 1.1 million power looms, is one of India's largest power loom hubs, providing direct employment to a million people in Bhiwandi, Malegaon, Dhule, Sangli and Sholapur.
"Only 20 per cent of these (Bhiwandi's looms) are running today," said Mannan Siddiqui, President, Bhiwandi Textile Mills Association, who has spearheaded the attempt to revive Bhiwandi's looms over more than 20 years. Malegaon, 270 km to Mumbai's northeast, is similarly struggling to keep looms running.
Cash rules critical parts of this supply chain: from farmer to yarn factory to yarn trader to power loom cloth manufacturer to wholesaler to retailer to consumer. Dyers, zip-and-button fixers and daily workers who lift bales are some of the poorest in this chain and they appear to be the worst hit. Textiles were the largest creator of Indian formal-sector jobs, with 499,000 added over the last three years. There is strong international evidence that exports help create additional jobs and push up wage and income growth.
In Mangaldas market, the biggest textile market in Mumbai – a city once known for its textile mills and labour unions, both now relics of history - N Chandrakant said business was 20 per cent less than normal for the winter-and-wedding-shopping season, which runs from November to February. There was no business in the first week of notebandi.
"Customers are buying simple, plain shirt material, and demand for luxury items has reduced," said Chandrakant. "People are being economical." While the demand for garments has dropped 30 per cent, wholesale demand has dropped 50 per cent, merchants told us. At Ahmedabad's New Cloth Market, trade had fallen by 80 per cent, according to Rajesh Agarwal, Secretary of the market association.
He explained why 60 of his 80 embroidery workers had returned to their villages after notebandi: When sales dropped, his cash dried up, so he could not pay salaries. Workers, said Agarwal, preferred to go temporarily jobless than endure the hassle of opening accounts in already stressed banks.
Slowing consumer spending has resulted in a slowdown in domestic demand for apparel and other end-products of textile industry in the immediate term as a fallout of demonetisation. As a result, retailers cancelled their cloth orders from wholesale traders. This part of the textile supply chain is all cash: Consumers pay cash to retailers, who pay cash to wholesalers because it is convenient.
Wholesalers, who place large orders with textile mills and pay through cheques or bank transfers, are not currently doing that because of the shortage of cash, driven by the drying up of retail spending. Bhiwandi labour contractor Ashok Ahuja who also owns about 60 struggling power looms said half his workers, from various rural districts of Uttar Pradesh, Bihar, Jharkhand and West Bengal, left for their villages when work dried up.
In Bhiwandi, Siddiqui argued that China, Pakistan and Bangladesh's policies have benefited their textile industry, while India's have enfeebled power loom owners like him, who must deal with not just low demand but daily price variations of yarn -- the chief raw material for power looms -- over the last four years. The cost of yarn which he buys from Mumbai varies intra-day, "like the stock market", said Siddiqui, as yarn traders increase or reduce the price according to daily demand.
On December 20, the yarn was selling at Rs 156 per kg. On January 4 the rate had shot up to Rs 178. When Siddiqui finally bought his yarn, it was Rs 200 per kg. "About 10 kg of yarn is enough to produce 100 metres of gray fabric, which typically sells at Rs 30 per metre," said Siddiqui. A 100-metre swathe of cloth fetched him Rs 3,000, of which Rs 2,000 went into buying yarn the day we visited. With the Rs 1,000 left, Siddiqui had to pay for workers, electricity and machine maintenance.
While the manufacture of yarn, the chief raw material in making cotton fabric, has largely been unaffected, the same cannot be said of ginning facilities in the same mills, where cleaned, seed-free cotton is obtained from raw, impure cotton. The slowdown between November and January was because cotton farmers were not accepting cashless payments.
By Abhishek Waghmare
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