CAA protests spell doom for Erode powerloom units

Massive anti-CAA protests in the national capital and other northern states have resulted in stagnation of over Rs 30 crore worth grey rayon fabric in Erode. The fabric produced in thousands of power loom units here are transported by trucks to be sold in major markets like Delhi, Faridabad, Ahmadabad, Jaipur, Surat and Mumbai.

There, the fabric is dyed and made into clothes for exports. “However, the fabric loads could not be delivered for garment making due to disruptions in road traffic following violent protests over the last few weeks. Also, blocking of internet at many places has affected online cash transactions. The buyers couldn’t make either advance payments or for goods received by them,” said B Kandhavel, spokesperson for Erode Vhisaithari Urimayalargal Sangam (Erode Powerloom Owners Association)

Export of rayon garments, mainly from Delhi and Ahmadabad to countries like Singapore, Malaysia and Afghanistan, too has come to a grinding halt due to the protests. “Muslims generally prefer garments made out of rayon materials. But, due to the prevailing unrest, they are in no mood to make new purchases and have led to a huge pile-up of the already existing stock of garments in shops in the northern states,” Kandhavel added.  

Following such sluggish demand, the orders for grey rayon fabric have nosedived to a near nil status. Thus, over 25,000 powerloom units manufacturing rayon have stopped production for 15 days from December 29.

However, the remaining 25,000 powerloom units producing free dhotis and saris for the state government and another 10,000 units producing cotton fabric are continuing with their operations in the district.

The CAA protests have come at a time, when the powerloom owners are already reeling under severe issues due to economic slowdown and GST. Most of the rayon fabric manufacturing units are located in Chithode, Lakkapuram, Manickampalayam, Veerappanchatiram and Ashokapuram.

About 14,000 tonnes of rayon fabric is made daily and lakhs of workers are involved both directly and indirectly in its production.  “From about 16 lakh metres, the rayon fabric production has come down to seven lakh metres and further down to nil production now. Indeed, such stalemate has struck powerloom units producing rayon starting from Deepavali itself,”  Kandhavel said.

In September, the yarn price stood at Rs 182 per kg while the made-grey fabric was Rs 30 per 120 gram. Over the months, the yarn prices dropped drastically to Rs 152 per kg and the grey fabric to Rs 24 per 120 gram.

While the price of yarn continued to remain the same, the price of made-fabric alone has dropped gradually to Rs 20 per 120 gram. “Falling prices of fabric has resulted in powerloom manufacturers suffering a loss of Rs 3 per metre. Inflow of yarn at a much lower price from China and Bangladesh has also added to the woes of the already ailing sector,” said H Sankaralingam, a powerloom owner.

In order to bail out the ailing sector, the powerloom owners have sought to earmark specific fabricwith certain thickness and size to be manufactured only by powerlooms, whileurging auto looms to stop producing them.

With power loom units halting rayon production, more than 50,000 workers employed in the sector are staring at a job loss. Also thousands of workers, who get employment indirectly in loading goods and transportation, are also forced to go without wages.  

Erode is a hub for power looms manufacturing rayon fabric with almost 75 per cent of its production across Tamil Nadu is from the district. Though Gujarat is emerging as a tough competitor in rayon production due to their low-cost fabric, they couldn’t match the Erode powerlooms in terms of quality.  

“Their cost of production is low as they save on transportation with their own dyeing units. Whereas, the grey rayon fabric made out in Erode has to be sent to Surat for dyeing purposes, which adds to our additional cost. The government, both the state and Centre should intervene and build necessary infrastructure to give a boost to the powerloom sector in Erode,” said B Kandhavel.