In the fourth of a six-part series Sahil Makkar finds out how badly Jalandhar’s sports goods industry was hit by the note ban and the price it continues to pay.
I: Cash crunch pain hits Dharavi’s leather goods hub
II: Demonetisation silenced the looms in this 150-year-old town
III: How demonetisation stole Sivakasi’s sparkle
Anurag Salaria, a sports goods maker, was standing outside his unit in a run-down area of Jalandhar. “I have told 10 workers to go on unpaid leave,” he said.
The central government’s November 8 announcement banning high-value notes has left hundreds jobless in the city’s famous sports goods hub.
Salaria supplied around 100 boxes of shuttlecocks daily before demonetisation. Now it is down to less than a third of that. Of the workers who have remained with him, Salaria has been paying them Rs 500 a week on the promise that their dues will be cleared once the currency situation improves. The workers insist on cash payment because many don’t have bank accounts and those who have them do not want to stand in long queues.
By rough estimates Jalandhar has about 20,000 small-scale sports goods-manufacturing units, and 100 medium-scale ones. The latter’s annual combined turnover is not less than Rs 450 crore. The small-scale units, on the other hand, are in the unorganised sector and use cash, which makes it difficult to estimate their turnover.
But the small-scale units are big employers. Before demonetisation, 16 different people made one shuttlecock at Salaria’s unit. Full-time workers were paid between Rs 200 and Rs 220 a day, depending on the work they could finish. Part-timers, including housewives and young women, got Rs 3 for finishing 12 shuttlecocks.
“Now I get work on alternate days,” said Asha Rani, a 24-year-old college student. Rani is yet to be paid Rs 2,000 for the work she did last month. Her mother, Sudesh Bhagat, has less work to do than earlier. She stitches footballs, and is worried about buying ration for the next month. Her husband works at a shop, earning Rs 6,000 per month.
Ravinder Dhir, president of a Jalandhar-based trade association, says demonetisation has been a setback for the sports goods industry in the city, located 152 km from Chandigarh.
“Sports goods are luxury items. Demand for our products usually picks up after Diwali, but demonetisation has ruined the high season. Now the sellers are sitting idle,” Dhir said, pointing to the shops, which had a deserted look. “Traders are unwilling to travel to Jalandhar for fear that they would be arrested if found carrying cash. The ripple effect will be felt for another two years.”
Manufacturers say the makers of cricket bats, balls, shoes and gym equipment have been in the doldrums for the past two to three years. This was because of the emergence of allied hubs such as Meerut in Uttar Pradesh and Jammu and Kashmir for sports goods.
“I regret having involved my son in the business. We are on the verge of a complete shutdown. Workers have gone,” said Bal Krishan Gidwal at his home-run football manufacturing unit in Jalandhar.
However, some big players are happy with the demonetisation move.
“We welcome the demonetisation decision wholeheartedly. This move will force people to get into the organised sector, and pay taxes and higher wages to workers. This will also stop under-invoicing and counterfeiting of branded products,” said Rajesh Kharbanda of Nivia Sports, a leading Jalandhar-based sports goods manufacturer. Kharbanda said there had been a substantial increase in sales in November.
Exporters too are happy with the demonetisation move, but say business has declined by 15-20 per cent.
“Our supplies to overseas clients are getting delayed by two weeks. Earlier the goods were shipped, but since it is a sale season in Europe and the US, our clients are asking us to send the material by air and share the transportation cost,” said Ajaya Mahajan, chairman, Sports Goods Manufacturers & Exporters Association, an apex industry body.
Next: The tea gardens of Assam