In just 15 days, the daily turnover at the textile hub has plummetted from Rs 45 crore to Rs 13 crore as traders are cancelling orders unless the mills accept payment in demonetised notes. Bulk orders have been cancelled and transportation of raw material has been delayed.
More than 80, 000 workers engaged in the looms and the yarning, sizing and processing units are leaving the town as payment of their wages has been deferred. Most of these workers are from Uttar Pradesh and Bihar.
Located more than 200 kilometres from Pune, Ichalkaranji has been a major textile hub in the country and sends ready cloth to Ahmedabad, Mumbai, Madhya Pradesh, Delhi, West Bengal and Karnataka.
Since the first textile unit was set up here in 1904, the town has thrived on the booming cotton trade that caters to the needs of major national and international brands. Satish Koshti, president of the Ichalkaranji Powerloom Weavers Cooperative Association Limited, "The industry was already struggling because of stiff competition. Now, with the government's note-ban bombshell, we are completely crippled."Koshti said their transactions usually take place through the banking system. "But since demonetisation, cloth traders have been demanding that we accept payment in cash, else the orders will be cancelled. We don't have any option but to cancel the orders. Contracts worth more than Rs 100 crore have been scrapped.Earlier, these traders used to pay through cheques."
Koshti said the association has nonetheless appealed to every member not to accept payment in banned notes. "The government is keeping a close watch on deposits of more than Rs 2.5 lakh. How can we accept cash payments now? The traders have even cancelled future orders. The situation is difficult, " he said.
Even major firms like Arvind Cotsyn Limited are struggling with growing inventory . Company director Laxmikant Marda said, "There is no demand for material. Traders are offering old currency notes, which we cannot accept. Our stock is piling up."
Chemical supplier Anil Saude said the demand for chemicals at the looms has gone down drastically due to cancellation of orders. The nearly 1.25 lakh looms in the town were expecting good business after the bountiful monsoon this year and had secured orders from north India and Karnataka. But their expectations have been shattered.