“The microenterprises here used to get a monthly business of about ₹120 crore. Now, it has dropped to just about ₹50 crore. There is almost a 60% drop in orders," said Sivakumar. When this reporter visited, he and his colleagues were drafting a letter to Prime Minister Narendra Modi detailing their hardships. Apart from the decline in orders, the letter, as well as other shop owners, pointed to the hurdles that have come up in the last couple of years as a result of the new goods and services tax (GST) regime.

The issues with GST go beyond the tax rate, and is more about the system’s inadequacy in understanding the ground realities of a small enterprise, explained J. Maheswaran, owner of pump-set manufacturer GV Industries .

The small and medium businesses in Coimbatore are almost completely running on credit, said Maheswaran. A local vendor usually supplies some spare parts on credit to a company, with the assurance of payment when the final product gets sold. In a slowdown, as products pile with sales drying, the vendor naturally suffers payment delays. But in the meanwhile, he has to pay his GST by the 20th of each month.

“If I have made a turnover of about ₹5 lakh, I have to pay about ₹90,000 per month as GST. I get the payment from the customer after a minimum of 90 days, that too, sometimes, partially. This has been the procedure in the market for years. But now, after you have made the bill, you have to pay the GST within 20 days... even before the full amount comes to you," explained Maheswaran.

“If you fail to pay the GST, you will get fined. If you continue to fail for three months, the GST will be blocked. Your bank account also will get blocked. So, now, we are borrowing money from wherever we can to pay the GST until we get the payment," he added.

Profusion of pink slips

At least a dozen factories this reporter visited with said they have fired at least 5-10 workers in the last six months. Nachi Engineering, which produces computer numerical control machines used for precision and control in auto and other industries, has fired 30 workers, mostly migrants from north India who have packed their bags and left. The locals who got retrenched have pinned their bets on the services economy—becoming Swiggy delivery executives and Uber driver partners. “I personally know some 125 people who have switched to these jobs because of the slowdown," said J. Puviarasu, head of Nachi Engineering.

It is an equally distressing story in the textile sector, the town’s other major job provider, where at least one leading firm has shut down two units and others have cut down on shifts to reduce manpower, said K. Selvaraju, secretary general of the Southern India Mills’ Association. Coimbatore has roughly 1,000 textile units, employing about 300,000 workers, according to data provided by the textile commissioner’s office.

A big job provider and head of a top textile company in the Coimbatore-Tirupur textile belt, who requested anonymity, said that 70% of his exports have fallen, hitting his turnover by 20% and costing him ₹100 crore last year.

“(In my company), all overtime is cut. Earlier three person’s job is now run by two people. One extra has been removed, or they are attached to another internal department. We stopped hiring. The last year has been a learning for us in lean management techniques," he said.

The textile industry had already been dealing with difficulties, particularly due to intense global competition. And now, a domestic slowdown has only pushed things even more to the brink. Debt levels of many small units, for example, have reached unmanageable levels.

Everybody is probably in debt to everybody else now, said Tamil Arasu of VMC Engineering, a small factory that deals with textile machinery and other tools. He usually keeps some additional stock expecting orders to peak during festivals, such as the Tamil New Year Pongal in early January. All that stock, worth ₹20 lakh, remains piled in a corner of his factory—a scene now common in most Coimbatore factories.

“During Pongal season, usually everything will fly off the shelves: pump sets, clothes, wet grinders, and so on. But not this time," said Arasu. To some extent, he added, it is not a surprise, since he himself has cut down on expenses. Even a traditional trip back to his village in Dindigul on Pongal was cancelled, in order to cut down expenses, he said.

“I have cut all non-essential expenses within the family. Only house rent is mandatory, everywhere else we are tightening," he added.

VMC Engineering is down from 15 workers to just three. The prospect of unemployment has made workers insecure. Karthik, one of Arasu’s workers, for instance says he is feeling a lot of pressure as he is effectively doing a two-person job in two shifts. “I tried searching for jobs in other places, but there are no jobs. So, my friends advised me to stay put in this company," he said.

Balamurugan, a worker who lost his job when Murugan’s precision tools factory downed shutters, said: “We thought there will be (more) jobs after Deepavali, but nothing happened. Then, we thought there will be jobs after Pongal. It’s a week after Pongal now and I don’t know if anything will come or not. I am thinking of going back to my village to rear cattle. I think that’s better."