Ludhiana Hosiery Tottering Under Demonetisation,GST Now Loses Big Market in Kashmir

LUDHIANA: The hosiery industry that identifies Ludhiana in Punjab has taken a big hit over the years because of policies adopted by successive governments. And now a double whammy, with the government;s decisions on Jammu and Kashmir that has led to an economic slowdown impacting directly on Ludhiana’s hosiery lifeline.

Demonetization and shoddy implementation of the Goods and Services Tax (GST) by the present central government led by Prime Minister Narendra Modi government added to the woes initiated by the earlier Manmohan Singh led UPA government that allowed free access to 46 textile items for Bangladesh. The adverse impact on the 12000 hosiery units has been deepened by the shutdown of Kashmir, with a major impact on sales in the Valley.

“Kashmir is one of the markets that work for us round the year. September is our main season there when we sell maximum hosiery items in new designs to the shopkeepers. But this year, after the decision to bifurcate the state and the following clampdown has brought down our business by 50 per cent,” Vinod Thapar of Knitwear Club pointed out.

Since August last year, very few Ludhiana made sweaters, pullovers, caps, jackets, gloves and blankets have made their way into Kashmir. Efforts are being made to increase sales elsewhere Sudarshan Jain who is the president of Knitwear and Apparel Manufacturers Association of Ludhiana said that economic recession has hit a common man hard and purchasing power is suffering as a result. “A family that would normally have purchased five woollen articles in a season is now purchasing only two and that too when it is compelled to do so. Only the middle and upper classes are making purchases like they used to earlier. The sales have plummeted by at least 25 per cent,” he said.

Hosiery owners pointed out that dozens of units have shut down on account of the fall in demand. This has led to unemployment and despair among the former employees.

“The situation is far worse if we take into account the hidden unemployment tof all this,” Thapar added, pointing that the demonetization followed by shoddy implementation of GST have had a cascading impact on the industry. “There has to be a proper intervention at the policy level,” he said.

The entrepreneurs said that the cut in production and hence employment further leads to a cut in the income of those in the professions of packaging, local and outstation transportation of produce.

Meanwhile, the provision of duty free access to hosiery items from Bangladesh that was announced in 2011 continues to play havoc with the hosiery manufacturers in Ludhiana.

“We desperately need a safeguard goods and customs duty. We have been repeatedly approaching the central government on this issue,” Jain said.

Hosiery unit owners in Ludhiana have been pointing to the trade incentives given to Bangladesh being misused. They disclosed that many of the traders from India have gone and opened export units in Bangladesh. According to them a large number of items being supplied to India by them are not manufactured in Bangladesh but in China, Vietnam and Taiwan.

These traders import articles from China, Vietnam, Taiwan and elsewhere and then replace the original tags with Made in Bangladesh’ labels. Then they repackage the articles and ship them off to India.“There are many big players indulging in such practices,” Thapar told this reporter.

The hosiery units in the city have been a big source of employment for both the local as well as migrant labour coming from as far as Uttar Pradesh Bihar, West Bengal and Jharkhand.

The Punjab government has extended some incentives to the hosiery industry recently. To facilitate business for Micro Small and Medium Enterprises (MSMEs), the Punjab cabinet led by Chief Minister Captain Amarinder Singh on Tuesday gave the go ahead for bringing the Punjab Right to Business Act 2020 in the forthcoming two day special session of the state assembly.

The Act is aimed at easing the regulatory burden on newly incorporated MSMEs by providing enabling provision of self-declaration besides exemption from certain approvals and inspections for establishment and operations. A state government spokesperson said, “With this Act, the MSMEs will get a big relief from the tedious process of getting regulatory approvals before setting up of the units. It is noteworthy that Punjab’s Industry is dominated by MSME component that include hosiery units.