Surat's polyester production has yet to recover from demonetisation

By

Isabelle Crossley

Published
Nov 8, 2017

Following demonetisation last winter and the implementation of the GST in July, Surat has seen a 40 percent drop in polyester production and over five lakh job losses with no hints of recovery on the horizon.

After demonetisation, consumers and businesses drastically reduced their textile purchases and the Goods and Services Tax (GST) saw the tax rates for many textiles vastly increase. The lack of buyers and higher tax rates have caused not only huge numbers of textile manufacturing workers to become unemployed but has also  slowed production in Surat, the polyester capital of India.

“There is no demand from any quarters – textiles have been almost erased from the consumers’ priority list, thanks to demonetisation and then GST,” said the General Secretary of the Federation of Surat Textile Traders Association, Champalal Bothra.

Most of the migrant workers who were stationed in Surat have returned to their home states. Factories that once ran for 24 hours a day only have two shifts daily now. Rajashree Thakur, the owner of an embroidery unit on Surat’s Varachha Road, reported that 200 female employees there now have no work at all. Where a year ago Surat produced 40 million meters of polyester each day, the figure now stands at only 25 million meters.

Unemployment among manual labourers in Surat is causing poverty levels to increase and, despite many complaints about GST rates for textiles, the government has not made any changes to their legislation. Surat exemplifies the outcome of the current struggle between the Indian government’s “Make in India” campaign which promises to create jobs and increase domestic production and the higher tax rates they introduced under the GST.