On November 8, 2016, Prime Minister Narendra Modi announced the demonetization of Rs. 500 and Rs. 1000 notes. People were running around to convert their old notes and buy in newer Rs. 500 and Rs. 2000 notes. This impacted various sectors of the economy including the textile industry. In India, textile industry comprises of second largest employment of 40 million workers directly and 60 million workers indirectly and has contributed to 11.04% of total exports of India during year 2010.

Starting from top down on the value chain, purchase of apparels was highly affected due to unavailability of liquid cash, which in turn affected the cash flow to the textile industry. The B2B Textile Manufacturers into seasonal wear have been highly affected. The sales of winter wear in India highly dropped due to lack of liquid cash. The retailers were affected due to the slow down of apparel purchase, resulting in a less cash flow into the textile manufacturing, which resulted in the complete slow down of the value chain. Cotton harvest season is around October – November, however due to demonetization, farmers were unable to sell their cotton resulting in increased inventories, and bottoming of prices.

Demonetization has changed the face of Bhiwandi, Mumbai, it has been turned into a ghost town due to the scarce and inaccessibility of cash as compared to its general hustle and bustle industrial city. Due to inaccessibility of cash, the workers that were blue-collar employees were not provided their weekly salaries on time, resulting in most of them going back to their hometowns in Madhya Pradesh, Uttar Pradesh, W. Bengal, etc. This shortage of labor has led to shutting down of many power looms and related industries at Bhiwandi.

With the ban on Rs.1000 and Rs.500 notes, ecommerce players were forced to stop Cash on Delivery (COD) payment modes on their websites. Certain big entities like Flipkart imposed a less than Rs.1000 purchases, whereas Amazon removed the Cash on Delivery option on Wednesday 9th November itself. Most of these businesses started emphasizing on online methods of payment with the use of credit/debit or paytm. Smaller entities also started accepting Paytm, due to lack of liquid cash available. As per a research done by the Forrester Research, “The cash on delivery share will come down and it will force customers to make payments online. Initially, in the next 1-2 months it may hurt ecommerce companies.”

Looking at both sides of the coin, clothing is one of our basic necessities; eventually it would fall back into its place once the country is comfortable with the routine of newer notes. We will always need clothes and eventually would start purchasing apparels with credit/debit and online modes. This in turn would start the cash flow in retailers and eventually leading down to manufacturers and mills. We need to understand this process as a temporary slow down in the textile industry, which would rise back up in a couple of months eventually leading to normalcy. A temporary phase that was set into motion will now eventually fizzle out and textile industry would be back into routine as before.


Ravvi Mansinghka / Founder & CEO

ravvi@textilebasket.com / +91 9167 66 9666

About Textile Basket

Textile Basket, is the world’s first and largest ecommerce fabrics marketplace, here to fulfill all your fabric needs. With over 8000 varieties of fabrics on www.textilebasket.com, we cater to all the readily available fabric needs of an entity directly from over 100 suppliers across India. Moreover, our second largest segment is Make to Order, where we create the fabric of your choice at the best possible rate and quality. This not only helps manufacturers reduce costing but also create their own innovations. Our third largest area of concentration is discounted readily available fabrics. All across India, there are a large number of manufacturers that always have some stock fabrics left over after production, due to excess fabrics or cancelled orders etc, these fabrics are of premium quality, lying around in the factories, the manufacturers are ready to sell these fabrics off at a slightly lower rate than purchase rate, and there are more than enough manufactures around ready to buy these fabrics.  Hence, Textile Basket becomes your one stop shop for all your fabric needs, making fabric purchase simpler than ever.