Glimpses of penury: Protests and shuttered textile units

Curiously, a government headed by an eloquent Prime Minister assisted by a volubly articulate deputy has failed to communicate to the people at large its imperatives for moving to the value added tax regime. Nor does it seem to have an idea of the havoc this move would wreak. The country's labour-intensive textile business is the worst hit.

Take small and medium merchant-manufacturers in textile townships across India. Beginning April 1, they have to pay a 10 per cent central value added tax (CENVAT) and have to maintain books of account. Most of these merchants procure raw cloth and pass it on to contractors. The contractors, in turn, farm it out to cutters, basic sewers, waist band belt specialists, loop makers, bar tack and eye button hole tailors, and those engaged in washing, dyeing, bleaching, trimming, ironing, and packing. There is no assembly line manufacturing. Most of those involved do it at home and are illiterate. Under the current structure, it is impossible to calculate the value added at each stage, as required under the CENVAT regime. "These units will have to maintain accounts and pay taxes, something they are not used to," says Sachin Menon, partner, Ernst & Young India.

Even though vat has been in the pipeline for years and the original date for its implementation was two years ago, the government seems to have failed to foresee what is happening now: small units going out of business and millions of workers being rendered jobless.

BT correspondents fanned out to capture the situation in Punjab, Maharashtra, Gujarat, Karnataka, and Tamil Nadu. Their reports paint a dismal picture whose broadest strokes are starvation, penury, and ticketless travel as jobless workers try to go back to where they came from: the backwaters of Bihar, Uttar Pradesh and Orissa.

PANIPAT AND LUDHIANA
All Tears, No Succour

Panipat: A mere 100 km from Delhi, looms lie idle and joblessness reigns

PANIPAT NUMBER OF UNITS SHUT: 35,000 NUMBER OF JOBS LOST: 150,000 IMPACT ON LOCAL ECONOMY: Rs 4 crore a day LUDHIANA NUMBER OF UNITS SHUT: 40,000 NUMBER OF JOBS LOST: 700,000 IMPACT ON LOCAL ECONOMY: Rs 10 crore a day

Ludhiana: At Vallabh Fabrics, everything has stopped

Dharampal, who used to earn Rs 80-100 a day, hasn't the money to buy even a bundle of bidis, forget the Rs 25-a-bottle drink. Balram has gone back to his home near Kanpur. Dharampal has already crossed his credit limit of Rs 500 a month at the neighbourhood kirana shop and will likely be shooed away if seen approaching with a bag. Hundred kilometres to the north of Delhi, Panipat has 45,000 small to mid-size powerlooms and handlooms manufacturing low-cost blankets and woollen garments, a business that generates Rs 1,600 crore every year. Now, its main Panchranga Bazar wears a forlorn look with most shops shut and jobless workers playing cards.

Two hundred kilometres further north is Ludhiana. Vallabh Fabrics, the biggest knitted fabric unit here, had invested Rs 10 crore in a recent acquisition of modern machinery; the new machinery is caked with dust. The unit has laid off 100 unskilled workers and retained the skilled ones at one-fourth the old salary. Home to 50,000 units generating business over Rs 2,500 crore a year, Ludhiana is much bigger than Panipat. Alas, that has merely translated into a harder blow.

-T.R. Vivek

Surat: Once bustling, powerloom units such as this one are dormant

BHIWANDI NUMBER OF UNITS SHUT: 500,000 NUMBER OF JOBS LOST: 700,000 IMPACT ON LOCAL ECONOMY: Rs 10 crore a day SURAT NUMBER OF UNITS SHUT: 640,000 NUMBER OF JOBS LOST: 600,000 IMPACT ON LOCAL ECONOMY: Rs 40 crore a day

BHIWANDI AND SURAT
All Quiet On The Western Front

Anyone driving downtown from the Surat railway station can't miss the buzz of commerce. Much of this buzz is textile-related, be it the thousands of small shops dotting the city's streets or the unkempt hawkers pushing trolleys that display their wares.

That was then. Since April 1, the city's 40,000 small textile units and over six lakh powerlooms that together employ four-to-five lakh workers and produce 20 million metres a day (street value: Rs 40 crore) have been quiet. Its 380 processing units have no raw material, grey fabric, and half of them are on the verge of closure. The supply glitch has pushed up prices by 15 per cent and many buyers are forced to pick up whatever they can lay their hands on.

Closer Mumbai, the powerloom jungle of Bhiwandi, which was teeming with 700,000 workers a month ago, resembles a ghost town. Its 500,000-odd powerlooms have been shut since March 28. Bharat Panchal, a partner in Shivam Coning Industries, tells the tale of a stampede at nearby Kalyan station where police had to be deployed for two days when thousands of migrant workers descended, all at once, to catch the first train home. "Most of the units are opting to send their workforce home as there's nothing here for them to do," says Panchal.

The tea shops, one of the more reliable indicators of the local business scenario, paint a bleak picture. All mobile tea stalls in front of big powerloom units have disappeared. Pradeep Joshi, who runs Vaibhav Canteen in Surat's Ashoka Market, says he sells only 400 cups of tea a day now, compared with 700 in better days. He's praying that the fate that befell textile workers will be spared him

-Abir Pal

COIMBATORE AND TIRUPUR
No Longer Cities Without A Pause

Coimbatore: Vijayalakshmi Textiles' Chinniyan is piling up inventory

COIMBATORE NUMBER OF UNITS SHUT: 111,000 NUMBER OF JOBS LOST: 350,000 IMPACT ON LOCAL ECONOMY: Rs 22 crore a day TIRUPUR NUMBER OF UNITS SHUT: 500 NUMBER OF JOBS LOST: 100,000 IMPACT ON LOCAL ECONOMY: Rs 9 crore a day

Tirupur: Work is down to a single shift now

It is difficult to find loiterers in Coimbatore. The city has a strong 'do-it-yourself' culture. People hardly ever complain; they fall, they stand up, dust themselves, and get on with their lives. They also believe in paying taxes. The city contributes Rs 1,024 crore in various levies, 90 per cent of which comes from small industries.

Not surprisingly, a vast majority in the city is in favour of vat. That majority, however, is of the manufacturing community, which accounts for three out of every four Coimbatore businessmen. The others, the traders, are not so sure they want it.

Things are different just a short distance from Coimbatore, at a quaint place called Sambala Thottam, meaning the garden of salaries, and at any of the other places around the city that house its 500 spinning mills. Beginning the first week of April, 50 per cent of the mills, each of which employs an average of 100 people (daily wages: Rs 75-100), have closed shop. The rest are down to a single shift, reducing their capacity by two-thirds. Many have not paid electricity bills, which usually range between Rs 2 lakh and Rs 8 lakh, and have sought deferment.

Ironically, small spinners have already been paying central excise since they were taken off the small scale list two years ago. The trouble is that powerlooms, which number 1.5 lakh in the Coimbatore region and constitute an overwhelming 75 per cent of the spinners' customers, have all shut down.

S. Vijayakumar, a sizing mill owner, is extending credit to some powerlooms so that they don't starve. "We can try teaching powerloom families to maintain records, but they will be unable to answer any queries by from an excise inspector,'' he says. "We will have to adopt cenvat as well as modernise, but we need at least 18 months."

The closure of powerlooms is costing this region Rs 22 crore a day and has affected 3 lakh people in the Somanur-Palladam-Avinashi belt.

It's no better in Tirupur, home to a Rs 1,000 crore hosiery industry built around a clutch of cottage units. The hosiery units stopped invoicing at the end of March. "I have had at least 25 sittings with the excise commissioner and he does not know the procedure himself and is not certain whether the new tax is 8 per cent or 10 per cent, or the extent of the CENVAT credit," says apparel manufacturer G.P. Agarwalla of Prime Textiles Limited. What small units can then make of the new tax regime is anyone's guess.

On my last visit to Tirupur, I could see a great many bullock carts, bicycles, mopeds, and motorcycles ferrying cloth at some level of processing. It was difficult to talk to people. They wouldn't pause. This time, the traffic was no problem, nor was talking to people.

-Nitya Varadarajan

BELLARY
Heat And Hunger

Bellary: Its jobless tailors have time to kill

BELLARY NUMBER OF UNITS SHUT: 225 NUMBER OF JOBS LOST: 20,000 IMPACT ON LOCAL ECONOMY: Rs 6 crore a day

Some 350 kilometres from Bangalore, Bellary has hitherto been known for recording the highest temperatures in the state (48-49 degree celsius is not unusual) and for a garment industry that garners Rs 100 crore a year and employs around 20,000 people.

Since April 1, the city's two main garment markets-52-year-old Jain Cloth Market and the decade old Mahaveer Market-have come to a standstill. For the likes of Rehamat Bi, 43, an illiterate widow, who ekes out a living by stitching for a contractor, the cenvat regime just doesn't make sense. "I don't know anything about tax. I just know that Seth is not giving us work and my machine (an old Singer) has been lying idle. My stomach is empty and no one is ready to lend me money," she says, making no attempt to hide her tears. Another tailor, Master Jilani points out that Bellary's dry land is not arable. Pointing to the sewing machine in his house, he says: "When it falls silent, our stomachs go empty."

-Venkatesha Babu