LUDHIANA, India: The garment industry in India's northern Ludhiana city has been hit hard by the government's decision to abolish larger banknotes.
Indian Prime Minister Narendra Modi's drive to purge "black cash" from the economy by withdrawing INR 500 and 1,000 bills has, at a stroke, wiped out 86 per cent of the money in circulation.
The audacious move has dealt a severe blow to small time traders and shopkeepers whose 90 per cent trade happens in cash.
The knitwear industry in Ludhiana contributes to about 80 per cent of the total woolen/acrylic output of the economy and generates employment for over 400,000 people in the city.
"The Ludhiana hosiery industry is the mother industry which has 12,000 units. The sudden ban of notes has had a very bad effect on our industry. More than 70 per cent of the industry has shut down. Workers have migrated back to their homes and unemployment has increased," said Vinod Thapar, chairman of the Ludhiana Knitwear Club, on Sunday (Nov 20).
Ludhiana has a large number of small industries - both registered and unregistered - which deal in ready-made garments, textiles and winter hosiery products. They export both locally and globally.
The industry has seen a downfall in consumer footfall as thousands have been left without cash in the wake of demonetization and strict limits on withdrawals from banks.
"It (demonetisation) has affected businesses a lot and only five per cent of work has survived. How will people purchase ready-made garments when they are not even able to meet their basic needs with the amount of exchanged currency? Our industry is suffering a lot. It was a season for hosiery garments and everything has gone bust," said Pushpkamal, a garment industry worker.
The move to demonetise the large bills is designed to bring billions of dollars' worth of cash in unaccounted wealth into the mainstream economy, as well as dent the finances of Islamist militants who target India and are suspected of using fake 500 rupee notes to fund operations.