State Of The Economy 2017

Playing For The Long Term

Textile and Pharma companies in Ahmedabad want clarity and stability in policy framework even as they battle short-term hiccups caused by demonetisation 

Soumik Kar

 

The seventh largest metropolitan city in the country, Ahmedabad, has always been one of the most important economic and industrial hubs in the country. With Gujarat being the largest producer of cotton, it was obvious for Ahmedabad to emerge as one of the leading textiles hubs. Thanks to the growing presence of textiles, the city came to be known as ‘Manchester of the East’. While giant textiles fell to power looms owing to higher costs and rising competition, Ahmedabad is still home to a number of textiles businesses and is the largest producer of denim in India. Over the years, the city has gone beyond textiles and is now home to several industries including a thriving pharmaceutical cluster. For our State Of The Economy survey this year, we take a closer look at the city’s two prominent businesses — textiles and pharmaceuticals.

Homegrown Advantage
Presently, Ahmedabad has more than 200 textile units. The industry employs around one-lakh workers. The textile industry in Ahmedabad is largely focused on the domestic market rather than exports. The city offers a favourable environment for the textile industry since both cotton and yarn are easy to obtain. The industry accounts for about 23% of Gujarat’s Gross State Domestic Product. 

Bharat Chhajer, managing director, Bumaco Fabrics, is someone who has seen the upheaval in the textile industry between 1980s and 1990s. “We were the distributors for Calico and Ambica Mills. But, when they shut down, we had to start our own processing unit. Orders were moving towards power looms since the rates for processing the cloth were much cheaper,” he recalls.

Today, the textile industry is facing another challenge. Demonetisation has affected demand in this industry. Aamir Akhtar, CEO-denim (lifestyle fabrics) Arvind Mills, says that they are worried about how long this short-term pain would last. This uncertainty has created lot of stress in the industry. Certain units have also cut down on production to offset the slump in demand.

Yasin Ahmedji, who runs a processing unit, says his production level has declined by 40-50% after demonetisation was announced on November 8th  last year. “This period reminds us of the slack we saw in 1984-1985 when 85%

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