No new garment units have opened in Tirupur in the past year. In fact, many garment units have shut in recent months. Reason: cash crunch following demonetization last November. The textile industry used to directly employ around 5,00,000 workers and log yearly sales of around Rs 40,000 crores. The cash crunch brought the industry, mainly comprising micro, small and medium enterprises, to a grinding halt. There was no business for three to four months.
A worker earning Rs 500 to Rs 600 a day had to lose a day’s salary to stand in the queue to exchange a sum of Rs 2000. The textile industry of Tirupur was expected to earn Rs 30,000 crores from exports alone in the year that ended on March 31. It ended with Rs 26,000 crores in exports, besides Rs 16,000 crores from domestic sales.
Even as the textile industry struggled on, it was hit by another disruptive event: GST. The Tirupur cluster has been facing a slow decline over the years. In 2004, India was a global leader in knitwear, just next to China. With the growing global market in Bangladesh, Cambodia, Vietnam, Sri Lanka, Myanmar and Ethiopia, it is no longer in the top position.