Manufacturing and trading at the textiles city of Surat had immeasurably suffered following the demonetisation of November 2016 and the rollout of the goods and services tax (GST) a year back. Subir Ghosh takes a sweeping look at the ground situation.
Ayear-and-half after demonetisation and twelve months after the rollout of the goods and services tax (GST), it is a nebulous state of affairs in the bustling textiles hub of Surat. Precise and reliable numbers are hard to come by, but those that are being bandied around are bleary indicators in themselves. All that one is left to go by are estimates (some random, some well-calculated), and these estimates vary widely depending on who one is talking to. In many ways, it resembles a conflict situation. There are truths, half-truths, and different versions of the same truth.
What few would dispute is that manufacturing and trading activity in cash-driven Surat had plummeted after the demonetisation of November 2016, and the GST implementation some six months down the line had brought transactional activities almost to a grinding halt. Street protests and bandh calls became the order of the day, and the city remained in the headlines.
It was as if Surat's textiles industry would have to start from scratch all over again. A year since we took stock of the ground realities, things have considerably improved. Yet, that would only be a relative term. Things have certainly improved-for many (depending on the nature of their business); but they are far from being "normal." On the other hand, what most disagree about is the extent to which business has been since brought back on track. In fact, there is a sizeable number of industry insiders who are convinced that matters are far worse than they were a year back.
Manoj Agarwal, president of the Federation of Surat Textile Traders Association (FOSTTA), contends, "After the rollout of the GST on textiles, the industry (in Surat) has lost its business significantly- ranging from 40 per cent to 50 per cent. Thousands of loom machines have turned into scrap in the last one year. Many small businessmen have either left the industry altogether in search of better avenues or have permanently returned to their respective hometowns. Consequently, lakhs of skilled and semi-skilled workers are wandering around here and there without work. The Surat textiles market is unorganised, consisting of very small to big players; hence, any comparable data is not available with us." Jitendra Vakhariya, president of the South Gujarat Textile Processors Association (SGTPA), agrees on the numbers, "Almost 50 per cent of the business was down after GST."
That is possibly where much of the problem lies-the lack of credible data. But for an association that comprises some 180-odd textile markets and more than 60,000 trading firms operating out of those multi-storied buildings, FOSTTA's numbers-howsoever indicative-need to be taken seriously by the government. Vakhariya's understanding of the situation is similar; "We do not have exact data, but it (business) has recovered up to 70 per cent of what existed before GST."