State of the Economy 2018

Only a Handful

The transition from a predominantly cash economy is shifting the balance towards large players, as small players struggle to survive in the post-GST regime

Photographs by Vishal Koul

The speaker system is blaring Laila O Laila, an earworm from a bygone decade but Kamal is oblivious to its tantalising beats. He gives us a nervous look and barely manages half a smile as our photographer goes about clicking pictures of the polishing unit where he works. “Most of the other workers have been fired, I do not know how long I will be here,” he says, glancing around. Like him, a significant chunk of the labourers in Surat are migrants from West Bengal, Uttar Pradesh and Bihar. 

This is in the thick of Surat’s diamond district, where the game is slowly shifting into the hands of the big boys. The implementation of Goods and Services Tax (GST) has played havoc with small and marginal players, especially in diamonds and textiles industries that drive Surat’s economy. The transition to supposedly a more transparent way of working from one that was dominated by cash has hit them hard. “You ask me about my investment for next year. I am not sure if I will be in the business that long,” says Jignesh Mangukiya, partner, Moradia Brothers, a diamond unit that had a turnover of Rs.1 crore last year. “We will be lucky if we get halfway there this year,” he grimaces. Work has come to a standstill and keeping his workforce of 20 gainfully employed is a task. This is down from 35 last year and more could be shown the door. 

It is no different at Rakesh Vavdiya’s unit Maharani Gumming that manufactures gumming stickers, a product with adhesive on one side and a printed logo or text on the other, that is supplied to the textile industry. Last April, he placed an order for two machines costing Rs.120,000. “They have hardly been used and I am stuck with them,” he says. His staff of 10 is having an extended lunch break and working no more than 3-4 hours a day. Reluctantly, Surat’s smaller units are realising that they necessarily have to work with proper billing documentation henceforth or face the prospect of shutting down their business. 

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