Textile businesses in Gujarat are experiencing high costs and low demand as knock-on effects of the recessions in Europe and the US. This has caused many businesses in the state to layoff workers or put them on unpaid leave.
“With demand muted and the high costs of raw materials, units are facing a liquidity crunch,” Narol-based processing unit owner Naresh Sharma told TNN. “We have been forced to reduce shifts and cut labour costs. We are currently operating with 60% of our actual workforce.”
Some businesses are using labour contractors to find workers and are paying them on a pro-rata basis in accordance with attendance. As many textile businesses are either downsizing or alternating at least 30% of their workforce, almost a third of workers will find themselves out of work at any one time. This will also affect the purchasing power of a sizeable portion of Gujarat’s population.
Inventory storage has become more costly for textile businesses, ET Bureau reported. High costs and low demand have led to an inventory pile up and this has caused demand to drop still further.
As Gujarat’s textile industry directly and indirectly employs around 70 lakh people, the layoffs are affecting lakhs of people. The drop in demand for textiles has also caused a drop in demand for dyes and chemicals used in the textile manufacturing process.
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