Over 70% of the units in the town are shut and more than 80,000 workers engaged in the looms and yarning, sizing and processing units are either leaving town or are reluctant to come back after Diwali as there is no cash for payment their wages. (Representative Image)

Exactly a month after demonetisation, powerlooms in Ichalkaranji, better known as the Manchester of Maharashtra, are struggling to come to terms with the effects of the currency ban. Over 70% of the units in the town are shut and more than 80,000 workers engaged in the looms and yarning, sizing and processing units are either leaving town or are reluctant to come back after Diwali as there is no cash for payment their wages.

Most of the workers come from Uttar Pradesh and Bihar. “The last two years have been very difficult for the industry and we have been barely managing to survive despite making losses because of high rates of the raw material. Powerlooms have been running at barely 30% capacity in the last 8-9 months because production lines cannot be shut. The scrapping of the Rs 500 and Rs 1,000 currency notes has brought the industry to a halt.

“Traders have cancelled orders and the units now have nothing to work on,” Satish Koshti, president, Ichalkaranji Powerloom Weavers Cooperative Association said. From a daily turnover of Rs 45-50 crore, business has sharply dropped down to barely Rs 10-15 crore, he said.

Demonetisation has affected the entire cycle of production and supply. Ichalkaranji has over 1.25 lakh powerlooms some 25,000 semi-auto looms and 7,000 shuttleless looms providing employment to over 80,000 people. Ichalkaranji produces some 1.5 crore meters per day generating revenues of Rs 45-50 crore crore per day.

Ichalkaranji has some 25,000 small units in this sector. Around 15% of this is direct exports while another 40% is exported indirectly. Located around 200 km from Pune, Ichalkaranji has been a major textile hub in the country and sends ready cloth to Ahmedabad, Mumbai, Madhya Pradesh, Delhi, West Bengal and Karnataka. According to Koshti, the season usually begins after Diwali and continues till June every year and this time after a two bad seasons, the industry was looking forward to a good season because of good monsoons.

“Initially for a fortnight, traders were forcing the industry to accept the demonetised notes.

Now the orders are cancelled and there is no work. Some of the looms are operating on previous orders. Although 90% of the business here is on cheque payment, the workers have to be paid in cash. Not many of them have bank accounts and since there is a severe cash shortage, many of them who went home for Diwali are yet to return,” he explained.

The Association has been following up with both the state and the Centre seeking government intervention. Payments due to the industry in crores of rupees has been stalled by traders.

There have been challenges in the last couple of years and the industry has been seeking incentives in electricity in addition to a waiver of the interest burden but there has been no response from the government, Koshti said.

“The government needs to infuse enough cash into the system to bring business back on track or business will be totally crippled, he warned. The association has been meeting on a regular basis to find a way out of the current situation. Presentations have been made to the government in the past and even now we have been appraising the government of our situation.

In neighbouring Malegaon, over 90% of the looms make ‘grey cloth,’ an unfinished fabric. Almost all of this buy-sell chain is informal, and operates on cash. In the year 2000, under the Centre’s Technology Upgradation Fund, Ichalkaranji received 72% grants of the total sanction of Rs 144 crore.