Punjabs leather industry facing downturn due to US slowdownDecember 3rd, 2008 - 7:42 pm ICT by ANI
By Karan Kapoor
Ludhiana, Dec.3 (ANI): With global economic slowdown affecting almost all countries around the world and the United States economy being the worst-hit, the Indian exporters and manufactures have not been able to escape the heat.
The small and medium scale enterprises in Punjab are facing a major crisis and now seeking a bailout from the government. The States leather industry particularly is facing a major downturn.
The 80 million dollars leather trade revolving around exports to Europe and the U.S. has been hit by the global economic slowdown.
A sharp decline in exports and domestic consumption is being witnessed by Jalandhar city, which has a million-dollar leather complex housing over 45 tanneries and dozens of manufacturing and export houses.
Ajay Sharma, Punjab Leather Federation advisor said, We have been hit by global meltdown. Being basically focused on exports, the meltdown has affected the industry greatly. Some units have faced order crunch to the extent of 30 to 40 per cent. Some people like us who are in high-tech business may be hit by 20 per cent. The impact varied to 20 to 50 per cent in some cases.
Punjab has businesses worth more than 10,000 crore in engineering goods but they have witnessed a downfall of 25 to 30 per cent in production in the last few months. Many workers have been retrenched to cut costs.
Hand toolmakers, an important part of the local economy, have drastically cut prices following a slump in demand from Europe and America.
The Hand tool industry suffered losses of over 8 million US dollars in October.
Anil K. Sodhi, one leather exporter said, Slowdown has affected the growth of this industry to up to 32 per cent by October end (2008). And this slowdown has not only reduced the demand but it has set aside the export orders in process.
Besides falling demand, the fluctuating rupee has also affected the margins of the engineering manufacturers.
Majority of small and medium enterprises are in `distress” as this is the first time they are faced with a crisis of such propensity.
P.S.Rajpal, General Secretary of the Small Hand Tools Manufactures Association said, We have been in this business for the last 40 years and had never faced such a crisis. At present, we are facing severe slowdown, as more than half of the units have closed down. Workers in the hand tool industry are in trouble. And those, who are being told to quit are asking money but, the industry has no money to pay their dues.
The 1,200 odd sports goods manufacturing units in Jalandhar that were expecting double-digit growth after India’’s best ever performance in Beijing Olympics, too are faced with a difficult time. The 120 million USD sports industry is now asking for government aid.
Surjit Singh Jauhari, Sports Good Industrialist said, The government should come straight to the help of industry. First, they should bring down the rate of interest to minimum six per cent. It shouldn”t be more than that and could be brought further down that will help further to the growth of the industry and to keep people in flow.
Dark clouds of uncertainty are presently hovering over the industries in Punjab, which are trying their best to overcome the crisis. (ANI)
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Tags: bailout, crore, domestic consumption, downturn, europe and america, export houses, export orders, global economic slowdown, global meltdown, hand tool, indian exporters, karan kapoor, leather exporter, leather industry, leather trade, medium scale enterprises, punjab, tanneries, tool industry, united states economy