My friends ask me that i have not been active on WordPress from a long time while so many happenings have taken place in the meanwhile on which my insights were much expected.
I’ve myself been very busy to understand & work according to the laws of the government. This took a little time to respond. Sorry for that.
I know that my friends have 2 things in particular on which they want to draw my attention to. First demonetization and second GST (Goods and Services Tax) and its impact on Chikan industry.
DEMONETIZATION was a good step to tighten the noose on black money which failed due to many reasons mainly:
1. Financial & Legal Advisors.
2. Bankers
3. Security Staff
4. Commission Agents &
5. Help from friends and dependents
FINANCIAL & LEGAL ADVISORS devised ways to deposit black money in banks, insurance & other investment sectors or pay demonetized currency to suppliers & other outstanding govt. bills as electricity, water tax, house tax, etc.
BANKERS on day 1 worked in military style – NATION FIRST. Clearks worked with full devotion till 3-4 days. Then when bankers understood how they may benefit from demonetization, they started working the anti-national way which included the roles of SECURITY STAFF & COMMISSION AGENTS.
In a bizarre incident SECURITY STAFF refilling ATMs flew away with cash van. Other instances of delivering new currency at “customer’s” doorsteps in “collaboration” of COMMISSION AGENTS have also come to light.
COMMISSION AGENTS charged from 15% in the start to 40% to 60% by the final date (for depositing old notes). Some COMMISSION AGENTS were also caught by tip – off by authorities of railways, roads & by intelligence and police with huge sums of demonetized currency.
FRIENDS & DEPENDENTS deposited some money in their accounts which they paid back in later months. They also stood in queue to change the currency everyday for long hours.
Queuing for long hours to change currency of known or even unknown persons fetched these ‘line-mans’ 300 to 500 rupees a day. These were labourers who used to work as rickshaw pullers, masons & porters.
IMPACT OF DEMONETIZATION ON CHIKAN-KARI
The time was for 2017 season’s production which failed flat on the face as all the money went inside the bank not to come back soon. E-payments of any amount was permissible but the artisans had no bank accounts.
The government of Narendra Modi can’t be blamed for this as it had given ample time to the citizen to open ‘Jan-Dhan’ bank accounts which the artisans (like many other citizen) did not.
However, with the current situation the artisans stopped bringing ready goods as they knew they would be paid off in old currency which also put the brakes on acceptance of material for new production.
Point to be noted here, the artisans who had bank accounts in their villages took payment through cheques but they did not clear even in 30-40 days. Clearance (of cheques) in cities were taking more than 15 days in that time due to the rush in banks which was not giving clerks sufficient time to look in matters other than cash dealings.
So a cheque became useless a useless piece of paper for poor artisan during those days.
An instance that the Mahajans (money lenders) were taking 30%- 40% commission to pay cash right away against those cheques which was not a good bet for an artisan was also reported.
Overall, Chikan production fell to zero in those 2 months. It affected both the manufacturer & the retailer. For the manufacturer it was a GOOD period because no stock was produced, season came good, their old & stagnant stock got sold out. On the other hand it was BAD for the retailer.
Stocks were selling out due to the good season & the retailer was left with nothing else to clear the stagnant stock of the manufacturer. It was really very hard to convince the customer with the dead stock. Salesmen got a hard time & the customer was also not very satisfied.
The above statement can be understood well with sales in yearly Hyderabad exhibition where Hyderabadi people rejected them & did not give even 35% sales as in previous years. Hyderabad & Vijaywada exhibitions are places where almost all the dead stock of this season of a manufacturer gets sold out at very cheap prices (sometimes even cheaper than from Lucknow’s price).
This impression of that period on the customers’ minds is a very negative signal for the industry. Not all may understand but that will become a wound which can take a lot of time & effort to heal.
It must also be noted that Chikan roughly covers just 1% of garment industry in India so a customer has many other options whereas Chikan walahs have none.
IMPACT OF GST ON CHIKAN-KARI
Chikan & other hand-made goods like zardozi & Benarasi Saree were exempted from any kind of tax (even registration) to promote local craftsmen & trade since 1947 when India gained independence.
Traders of fabrics (uncut cloth) & Sarees were also exempt from registration & tax. Under GST these came under 5% tax. Surat in Gujrat state is the main supplier of fabrics & sarees to the entire country. It went on strike for 30-40 days. Benaras was on strike for 15-20 days. Chikan traders downed their shutters for 2-4 days. Zardozi traders took out a march in old city area against GST. But this all fetched no results.
We are talking here on Chikan trade, it got impacted. No fabric (base material) was coming from Surat in these 30-40 days. Morever, Chikan traders – in the hope that GST will not be implemented on them, did not register till 20th July. Till today just 50%-65% have registered themselves.
Due to this fabric from Surat is still not being sent to the traders here as it is mandatory to have a GST number for the goods to move from one state to the other though for the time being.
The timing of GST has affected Chikan production for Dussehra & Deepawali when it gets sold the most in Bengal, Maharashtra & some parts of southern India.
Retail buyers (customers) are getting bored by the same stuff. This scenario is going to stay for some months. Its not very easy to predict if all’s going to end well as the prices are bound to increase by almost 20% in Chikan.
Its not new that 15%-20% price hike has never touched Chikan sales. Chikan has got dearer by at least 100% in the previous 5 years by rate increase in price of cloth or workmanship, so it may be said that customers will absorb such hike for their love for Chikan-kari. But its also our duty to give them back the love they give us by offering new designs of garments & prints (blocks) and better quality & workmanship.
Once again a big THANK YOU, dil se.. to all the Chikan Lovers for standing by us in these difficult times.
krishna chikan 