The currency crisis threatens to have serious effects on the economy. Due to the cash crunch, it has become difficult for garment units in Ludhiana to buy raw material, pay bills and make payments to laborers. The major problem is shortage of labor. Workers have stopped coming to factories because they haven’t been paid. Or they are lining up outside banks to get their notes exchanged. Either way production has been hit. Employers themselves have not been able to withdraw adequate cash for managing factory expenditures.

Garment exporters are facing canceled orders due to delays in production and drop in orders from local or multinational brands. Leading brands have cut down their orders. It is feared that exports of garments from Ludhiana’s micro, small and medium enterprises can drop by 30 to 40 per cent.

Apart from the labor crisis, the supply of raw material from vendors has been hit due to the cash problem. Manufacturers fear this disastrous situation is going to hurt their businesses badly and that they have to suffer heavy losses.

Ludhiana is a leading producer of woolen and acrylic knitwear although it also uses extensively cotton and other blended fibers to produce a wide range of fabrics, hosiery, knitwear and readymade garments.