Leather industry takes 60-75% blow from demonetisation

Trade in major clusters of leather and related products in India has been hit hard by the demonetisation, industry body Assocham said on Monday.

“There has been a significant decline in the arrival of animal hide. While tanneries in Chennai have recorded more than 60 per cent fall in skin arrival, other major leather clusters - Agra, Kanpur and Kolkata have recorded over 75 per cent decline in this regard,” a survey-cum-analysis on ‘Impact of Demonetisation’ on leather industry’ by Assocham said.

“The leather industry is reeling under stress as butchers are not providing animal hide for (which) they are not being paid in cash, tanneries are not able to get the hide transported as they are unable to pay the drivers in cash,” it said.

Moreover, the survey said, shortfall in coal supply for boilers is also adding to the industry’s woes.

Assocham interacted with representatives of about 100 tanneries in major leather clusters Agra, Chennai, Kanpur and Kolkata - in the last fortnight to assess the impact of Centre’s November 8 decision to demonetise 500 and 1000 rupee notes. It observed that the leather industry in aforementioned centres has been facing grave difficulties in production activity due to demonetisation as they are unable to make payments on every level be it for raw material, for transportation and the workforce.

Majority of total respondents said their production has declined by over 60 per cent while number of workers in leather factories has also come down drastically by about 75 per cent as they are not being paid on time, it said.

Even industries have to lay off employees due to lack of finances, the survey highlights.

About 60 out of 100 respondents said they are no longer taking export orders in the wake of demonetisation as they would not be able to complete order on time. Many of the industry representatives said that leather industry would take 9-12 months time to recover from the impact of demonetisation, it pointed out.

 Cash crunch continued to hit the people in Mumbai over 40 days after the demonetisation move, even as the queues for depositing the old scrapped notes at the banks eased.

However, the people are irked as ATMs at many places continue to run out of cash.

“There is a short queue for withdrawal and almost no queue for the deposits. You can see it here,” said a senior executive of a leading private bank in Fort area. A senior officer at Department of Post, Maharashtra and Goa Circle, said, “The numbers of depositors as well the amount of deposits across the five regions in the circle have reduced by over 80 to 85 per cent and so is the case with opening new accounts.” 

However, some people in the city complained that the note ban has increased their difficulties.

Sheetala Prasad, a grocery owner from suburban Kandivili, said, “These days have been the worst days for my business. We are facing a lot of problems for want of cash.” 

He expressed unhappiness over the Rs 50,000 withdrawl limits for current account and Rs 24,000 for savings account.

Expressing his anguish over the ATMs running out of cash, Ramesh Tripathi, a trainer at a gym in South Mumbai, said, “The ATMs have virtually become defunct. The ‘ATM Closed’ boards are now a permanent feature.”