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September 17, 2019 06:05 AM


Slowdown hits one of Dharavi’s most famous cottage industries. More than a thousand units shut. Business down 50 per cent
The downward spiral began with the demonetisation and it was hastened by the implementation of the Goods and Services Tax (GST)
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The economic slowdown has hit one of Mumbai’s most famous cottage industries – Dharavi’s leather manufacturing units – hard. Over a thousand units have shut shop in the past couple of years and close to a lakh workers have been rendered jobless.

According to Leather Goods Manufacturing Association’s president Manohar Raibage the downward spiral began with demonetisation and was hastened following the implementation of the Goods and Services Tax (GST).


Raibage said manufacturers and retailers have dropped to such an extent that some of the biggest players have just shut shop or halved operations by laying off workers. “Business is down 50 per cent from what it was two years ago. We have been telling ourselves that orders will pick up during the festive season. But this festive season is the third consecutive year of falling sales. It is unsustainable now,” he said.

Apart from demonetisation and GST, Raibage sees cheap Chinese products flooding the market as a major cause of the industry going under. “Their faux leather products are at least ten times cheaper. The government has not provided us any protection against these cheap imports,” he said.

Raibage said since GST is applicable on both – the raw material and the finished products – margins have shrunk drastically. “Bulk order customers like corporate groups who ordered diaries, bags and other leather accessories do not want to pay the GST while buying our products,” he said.

Dharavi’s leather market is one of the biggest contributors to the slum colony’s famed informal economy that supports thousands of families. The total estimated size of Dharavi’s economy – which, apart from leather, includes pottery and waste recycling – is close to Rs 6,000 crore a year.

But while once thronged by people looking for leather bags, jackets and shoes, the market comprising over 150 boutiques lining the main road from Sion to Dharavi now wears a desolate look. According to locals, while till two years ago every shop on an average received 20-25 customers a day, the numbers are down to two or three now.

Noor Alam’s 20-year-old leather manufacturing unit in Dharavi once employed 10 to 15 artisans working all day on eight leather sewing machines. Today, six of his machines are idling and most of his workers have left in search of other jobs. For this, Alam blames demonetisation and the 18 per cent GST on leather. “I might shut the remaining machines as well as there is no work. We keep waiting for the festival season to bring us some fresh orders, but in vain,” said Alam, who says his business is down 60 per cent compared to 2016.

Like innumerable small-scale entrepreneurs across the country, Dharavi’s leather industry too suffered a major setback with demonetisation. But their woes were deepened by the May 2017 ban on trading of cattle for slaughter under the Prevention of Cruelty to Animals Act and the implementation of GST.

Kisan Mahanto, an artisan from Bihar has been living in Dharavi since 1992. He makes bags, jackets and accessories. “There has been no work in the past three months. Two of my workers have left the unit,” said Mahanto, adding that he is completing an old order. With no fresh orders, Mahanto knows he has fallen on hard times, but what he misses the most is the whirring of his machines.

Nitin Hazare has been in the leather manufacturing business for the past two decades. He has been on the top of his game, reinventing the craft with new techniques and machines. In the pride of having done well despite the odds, last year he rented a third shop in Dharavi to sell leather products. “I have not even been able to recover the rent of the shop, Rs 35,000 per month, and other expenses. Neither have there been buyers nor new orders from companies. I have finally decided to shut shop,” he said.

Chandrakant Pote, another shopkeeper from the industry, pointed out that the footfall has reduced, especially since the GST came into force. “I could foresee the future and reduced the prices of my goods. There is very little profit but at least some money is coming in,” said Pote, adding that leather is such a commodity that it cannot be stored for years without proper upkeep, which also costs a lot. “The corporate orders that we used to get during festival season have drastically gone down. Even if we get an order, they want to fleece us. There is GST on raw material as well as on the final product. It’s impossible to sustain the business now,” he said.

With the economy slowing, competition from China increasing, and the government unlikely to alter GST rates, Dharavi’s leather traders see little hope of a revival in the near future. Could this be the end for one of Mumbai’s oldest cottage industries

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