Gurgaon industries yet to recover from demonetisation blow

Industries in Gurgaon and Manesar have been badly impacted by the slowdown following demonetisation. The demand for automobiles, industrial and other goods produced in this manufacturing zone has plummeted.

Exporters, who are relatively less affected by the decision, are also facing problems in paying wages. “We supply material handling equipment to auto and e-commerce industry across the country. There has been a 60% reduction in demand as the cash-on-delivery business of e-commerce sellers has crashed,” Arun Kumar Popli, CEO of AV Engineers, said.

Manufacturers said that while the demand has gone down, steel prices have risen by almost 30% in the last three months. “This is a double whammy for the manufacturers,” Popli said.

The industry is also in trouble due to poor cash flow. “I have to run to Delhi every week to get ₹50,000 from the current account for day-to-day operations. People are also scared and they don’t want to spend large amounts. This has slowed down the entire business cycle,” Suman Chawla, secretary of Manesar Industries Welfare Association, said.

There are around 500 small and medium enterprises in Manesar and many of these are vendors who cater to large automobile companies such as Honda Motorcycles, Hero Motocorp and Maruti. There are also many garment exporters and furniture manufacturing industries that have taken a 30%-40% hit in business.

Manoj Tyagi, the secretary of IMT Manesar Industrial Association, said that fewer motorcycles and scooters are being produced in Gurgaon due to the low demand. “No one will admit it but vendors tell us that business is down by 40%. The cash situation has to improve for normalcy in business,” he said.

Industrialists in Manesar said they are also worried about the inability of the system to open bank accounts for their workers, which has made paying salaries difficult.

As per the data compiled by the labour department, accounts have been opened only for 33,340 of the 2.12 lakh registered workers in Gurgaon. Even workers whose labour cards are regularly updated, numbering 98,352, have not been covered.

“There are 2 lakh unregistered workers in Gurgaon and no one is worried about them. The department had promised canteens at labour chowk but these are yet to come up. Around 70% of the daily wagers have returned home,” Rajender Saroha, convener of Bhavan Nirman Kaamgar union, Gurgaon, said.