Tamil Nadu's handloom industry weaves its way around demonetisation to stay in business

For the first time in his 50 years as a silk handloom weaver in Kancheepuram, D Parthasarathy collected his wages from the bank. Last week, he took his friend along with him to help him withdraw money from the ATM.

“I don’t know how to use the ATM, so I need to ask someone to help me with it,” said Parthasarathy cheerily, while peddling the weave in the front room of his house. “Now that I have to visit the bank regularly to collect wages, I have to learn how to use the different banking facilities.”

Parthasarathy is a member of the Arignar Anna Silk Weaver’s Handloom Cooperative Society in Kancheepuram, a town in Tamil Nadu known for its pure silk saris. Till earlier this month, he would receive advance wages in cash from the cooperative materials along with materials for every sari he weaved. However, after the government announced that Rs 500 and Rs 1000 notes were no longer legal tender from November 9, Parthasarathy’s wages for weaving saris are being transferred directly to his bank account.

For the past two weeks, him and others weavers of Kancheepuram have had to make trips to the bank to get their wages. But most of them do not seem to mind.

“We weavers have hardly any savings anyway,” said Parthasarathy, “So we do not have many notes to exchange. We just need to withdraw the advance we get, use it to eat and then start to work.”

Formal banking in place

At the silk weavers’ capital of Tamil Nadu, around 50 government-run cooperative societies employ thousands of weavers around Kancheepuram. These weavers are given silk along with gold and silver zari, or thread, by the cooperatives. They are also paid in advance for their work on every sari and the rate depends on the intricacy of the weave and the level of work involved. Most weavers work from home, where they have their own handloom, in pairs or trios – usually members of the same family.

Weaving one sari usually takes about 15 days, even more if it involves an elaborate design. Parthasarathy gets anywhere between Rs 1,000 to Rs 5,000 for his labour on a sari, which is often sold at double or triple the price in the market. As this study on silk handloom cooperative societies shows, the socio-economic conditions of weavers of Kancheepuram is very poor.

“Most of the weaver members involved in silk weaving (in Kancheepuram) are illiterates. As they are uneducated, they face many problems in knowing the modern techniques in weaving, in utilizing the welfare schemes of the Government, in getting financial assistance from banks and other similar funding agencies.”

— Asia Pacific Journal of Marketing & Management Review

While this is the first time that the weavers are receiving their wages in bank accounts, they are not entirely unfamiliar with banks.

“We sometimes receive our yearly bonus in the account,” said NC Rajendran, another weaver. “Also we get loans from government schemes to buy certain weaving equipment parts.”

But while the production of sarees may not have been significantly impacted by the demonetisation, there has been a definite downward spike in sales.

Drop in sales

With a deft flick of his wrist, a portly salesman at one of the many silk saree shops in Kancheepuram’s Gandhi Road spread a peacock-blue sari with broad gold-embroidered borders before a customer who examined it sceptically.

“You will not get this piece anywhere else!” declared the salesman, “This is pure silk weaved on a handloom, with a unique design. Wear this at the next function you attend and all your relatives will admire you!”

For the past two weeks, this salesman, as well as many others in Kancheepuram, have been using almost every trick in the book to convince their customers to buy silk saris. Since the government made the surprise announcement on the demonetisation, one of the biggest silk handloom cooperative societies in Kancheepuram, which wished to remain unidentified, has seen a 60% drop in sales in the past two weeks.

“About 70% of our sales take place through cash transactions,” said the manager of the cooperative society. “Many people come with cash that they have saved up for a wedding or some other occasion, and buy in bulk. This time though, they are hesitant.”

The salesperson at the Salem Silk Weavers Handloom Cooperative Society, V Ravichandran, echoed these troubles. “The month of Karthikay (November 15 to December 15) is a wedding season, so people often visit our shop at this time,” he said. “Customers also buy now for the next wedding season, starting January 15. This is when our sales are supposed to peak, but they have been terribly impacted.”

Impact on private businesses

Private businessmen in the handloom industry had mixed reactions to the demonetisation.

A businessman who wished to remain unidentified said that he could not pay his 30-odd employees through cheque or bank transfer as they would end up losing an entire day’s work standing in line at the bank.

“Most of them spend what they earn immediately, so they need to be paid in cash,” said the businessman. “Yesterday, I stood in line for three hours to withdraw money to pay them, but after a while, the bank officials said they were out of cash.”

The businessman said that he had also not been able to obtain the raw materials – silk from Bengaluur and zari from Surat, because of the cash crunch. “This problem is so interlinked like a chain, it affects each stage and production and our business will spiral downwards.”

Murali, who weaves for a private businessmen, also expressed concern about finding the time to go the bank to get his wages.

PCK Boopathy, another private wholesaler who supplies to well-known brands such as Nalli, Kumaran Stores and Sundari Silks, said there has been no negative impact of demonetisation on the industry.

“We have started paying all our weavers by cheque after the notes were banned,” he said.

Handling a business established by his grandfather, Boopathy was proud that he belonged to the Telugu Chettiar community – from which successful people in the handloom industry such as Nalli Kuppuswami Chetti (Nalli Silks) and LG Chengalvaraya Chettiar (of Sri Kumaran Stores) also hail.

Boopathy said his business mainly ran on bulk orders to retail stores, so it had not been impacted by the government move. Even individual customers, he said, continued to come as they were loyal to him.

“Rich folk may buy expensive saris on whim,” he said. “But most middle-class families plan carefully on where they would like to buy their wedding sarees and they attach a lot of sentiment to it. So customers have bought from us for generations, out of tradition.”

Boopathy expressed full support for the move to ban high-denomination notes.

“Right from my grandfather’s time, my family has supported the Congress,” he said. “So have I. But if somebody does something good, we have to acknowledge that. There was a lot of corruption during the Congress’s rule. They only took care of themselves. But Modi is not driven by family politics, he has the nation’s interest at heart.”

When asked why his loyalties lie with the Congress even when he acknowledges its flaws, Boopathy said that he stuck with the party out of tradition.

“After the election, we have to respect whoever comes to power,” said Boopathy. “Like how Obama said after the American election – that they now had to work together as America. Same applies for India. People will suffer for a while, but just like how [Tamil Nadu Chief Minister] Jayalalitha took rest in the hospital for a few months and is now recovering, similarly, India will also recover.”