It is known to all, that the denim fabric manufacturing industry is the sunrise industry of India. This has been proved by the fact that in the last decade, it has been growing at a healthy 15 per cent CAGR. Currently, the industry has an annual installed capacity of 1.4 billion meters which is supposed to be the world’s second largest after China. The sales turnover of the industry is estimated to be around Rs 15,000 crores, provides employment to approximately 4, 00,000 workers, besides the indirect employment.

However, with currency demonetisation the industry has been paralysed and 50 per cent capacity has shut down. The denim fabric is washed before it can be marketed, these upstream activities are majorly done in the unorganized sectors located in the SSI hubs of Gandhinagar and Tank Road, Delhi, Ulhasnagar in Mumbai and Bellary near Bengaluru. Since these hubs mainly deal in cash, they therefore have shut down due to the cash crunch. As 85 per cent of the fabric is sold in domestic market they are badly hit.

Experts fear, since upstream activities of garment sewing and washing in SSI hubs will take a while before they can change to working smoothly with the banking system, they are not foreseeing any short-term recovery of the market in the near future. This has led to shutdown of denim mills that has resulted in a loss of jobs. Considering the grave situation of the denim industry, it is likely that the government may announce immediate enhancement in present duty drawback rates and also extend some more benefits under focus product and focus market scheme so that mills can competitively try to shift to the export market.