Ahmedabad: Despite the streamlining of the cloth making business in Gujarat due to GST regime, the apparel manufacturers in this western state are facing a substantial downturn in business due to the slowing down of the ‘flow of money or the cycle of rotation of money’, President of the Clothing Manufacturers And Traders Association of Ahmedabad, one of the main hubs of this business in India, Girish Kothari today said.

Talking to newsmen on the sidelines of the inaugural session of a two days apparel exhibition ‘Season-2 ‘ organized by CMATA at the GMDC convention center here, Kothari said that this downturn of business to the tune of 25 to 30% has been caused by a mix of factors including changed customer behavior, difficulty in getting money/quick loan for business and lack of guarantee of payment etc.

He said that the lingering effect of demonetization was also there.

Kothari however said that the GST regime has helped in streamlining this mostly unorganized sector to a big extent and caused some ease in doing business. But this alone was not enough.

‘In fact there is no decrease in purchasing power of customers but their behaviour has changed. Almost 30 to 50% of our retail/off-line business has shifted to online. This has also caused a big cash-flow or money rotation issue in the off-line sector and affected the business. Almost 70% of the manufacturers and traders have seen a reduction of 25 to 30% in their turnover in the past 2 years. Many of them have willingly done so to avoid payment blockage,’ he said.

‘Apart from this online thing, there was also another issue regarding availability of money/credit for the business. Due to the passage of an act in the parliament last December, the Sarafi entry of the money in to our business has been stopped. The Sarafi money was not an illegal one and was of great help in case of sudden need of money but now it has stopped. The bank loans take time to process,’ Kothari said.

He said that another big and long time issue was about payment blockage of goods. ‘There were not enough laws to ensure that we are paid for the goods sold in time. If the government somehow secure us on this front and guarantee the payment, we won’t even need any loan and would be able to run the business at our own,’ he added.
‘It is a completely credit based business and many a times the money is not paid in time or not paid at all due to check bounce of the party. In such a case we have only one option and that is to approach a court and that is a lengthy process that no businessman prefers,’ he said.

Kothari said that if the government takes some measures for the safeguard of our business, it would flourish and otherwise the traders and retailers would be compelled to take extreme steps of suicide like farmers.

He said that in Ahmedabad city alone there were 1800 to 1900 cloth manufactures/traders who do an annual business to the tune of hundreds of crores.

Kothari said that if not enough measures were taken in time the small and medium players of the clothing manufacturing sector would give up to the major corporates who were being benefitted due to the current scenario.

DeshGujarat