Demonetisation and GST: Handloom weavers in PM’s constituency bear the burden

Hundreds of looms are shut due to a lack of orders, drop in revenue, and GST struggles

ByKanchan Srivastava
Demonetisation and GST: Handloom weavers in PM’s constituency bear the burden
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For generations, 28-year-old Abdul Azim’s family has been in the business of weaving the legendary Banarasi silk sarees. Living in Bajardeeha, a township of weavers in the heart of the world’s oldest living city, Azim’s forefathers earned their livelihood for centuries with just four handlooms.

Not for Azim though. Two of his four looms installed in the dingy groundfloor room of his home are lying idle due to dwindling demand. The work of the other two looms has also slowed down because the desired silk yarn is not readily available in the market.

He had to return 22 handlooms recently which he had hired a few years ago to meet demand as well as expand his business. “We had been weaving 50-60 sarees a month till last Diwali season. After the announcement of noteban last November, our work came to a halt due to sudden currency crunch in the market. We are yet to recover from the shock,” rued Azim.

Azim and other weavers of Varanasi who roll out incredible zari embroideries such as jaamwars, jamdaanis, nilambaris, pitambaris, kadwas brocades on their handlooms having been having a tough 10 months. Earning has reduced to half to one third compared a year ago, they rue.

Just like other cottage industries in the country, the handloom sector in Varanasi is based on cash-driven deals. Illiterate weavers constitute a major workforce in the area. Most of them had never had a bank account before. Others did not have enough cash balance in their accounts.

Azim said, “As all the cash in hand was demonetised, we were literally left with nothing on November 8 last year. My workers had little money. November was spent in bank queues to exchange notes to run our kitchen. Meanwhile, looms came to halt as the yarn stock at home finished.”

No work for handloom at many households 

He, like most weavers did not buy more yarn because of the limited amount of new currency they had and after much hardship. “From yarn suppliers to whole sellers and exporters; all were left with huge invalid cash. Instead of business, they were all busy in exchanging currency. They started paying in cheques but encashing it was extremely difficult in those times. Moreover, everyone wanted to save whatever new currency they had. Consumers also tighten their purse strings leading to decreased demand of sarees just as other non-essential products. Money wasn’t moving at all due to uncertainty,” Roshan Jamil, another weaver said.

The cash crunch, chaos and undeclared shutdown of the loom town continued for three-four months, the weavers said. There are about 60,000 handloom and 70,000 powerloom weavers in the district, according to government data. Of them, nearly 90 per cent are small weavers who own two-to-six looms and work on a small margin. They were the most affected.

Jamil said,“The market gradually picked up after March this year when enough cash was available in the market. Before we could stand up again, goods and services tax came as another blow. Small weavers who are illiterate are now supposed to give receipts to the wholesalers, maintain books and pay taxes on sarees for the first time.”

All sarees—designer, embroidered or otherwise—now attract a 5 per cent GST, as part of the new tax regime introduced from August 1 w with an objective to make India a formal economy. Though the GST is applicable to businesses with over Rs 20 lakh annual turnover (which most weavers in Varanasi anyway don’t have), traders are trying to pass the burden to the weavers.

“The wholesellers who buy from us are deducting 5 per cent money from our payment in the name of GST. This has reduced our margin to almost nil. There is no point continuing this art if it not giving enough returns,” complained Azim. Weavers suspect wholesellers might be charging GST from consumers as well. To make matters worse, taxes on brocade, silk and dyes has pushed up the production costs and yarn supply has dwindled over the last two months, weavers claim.

Additionally, the compulsion of filing tax returns along with Aadhaar and PAN numbers is a challenging task for them mainly because of illiteracy.

“In Bajardeeha, out of 2,000 looms, nearly 1,000 have been shut for want of orders since demonetisation and GST were rolled out,” Jamil claimed.

Most weavers are either Muslim or schedule caste, tribes and backward communities. Men weave the sarees and women are involved in reeling of yarn, cutting extra threads from sarees and other works.

Women involved in pre-loom work such as making reels of threads 

Demanding the roll back of GST on sarees, the bunkars held a 20-day strike against GST in July under the banner of weavers and traders union- Banarasi Vastra Udyog Sangh. The GST council didn’t budge.

Mohd Lesha: Two of his four Powerlooms shut

“The July strike worsened our business further and we don’t know when will recover. Many young weavers are now doing petty jobs outside the state,” said 35-year-old Anwar. Those who own powerlooms are no better. Two of Mohammad Lesha’s three powerlooms have been shut for four months for want of orders. “I had no other option but to remove my workers. Those who are still working are being paid less than earlier,” Lesha said, blaming notebandi for the loss of work. The tradition of hand weaving has been a part of the cultural ethos of Varanasi since centuries.

The level of intricacy achieved in these handloom fabrics is unparalleled and certain weaves and designs are still beyond the scope of modern machines. Due to mounting losses, the number of handlooms in the Varanasi area has gone down by 30 per cent over the last five years, according to data made from the textile commissioner’s office. The powerlooms, which bring down the cost of the product and are faster, are gradually replacing them. This is despite the fact that powerlooms can’t replicate some of the oldest and intricate brocades. Those rare authentic designs might soon be extinct at this rate.

The Common Facility Centres are inadequate

There are nine Common Facility Centres (CFC) established by the government to help weavers with upgrading their skills, design, internet banking, acquiring Aadhaar and PAN cards and the procurement of yarn, dye and other raw materials. These were launched in 2015, at the behest of Prime Minister Narendra Modi. Over 1,500 handloom weavers have been trained at these centres so far which is inadequate considering the large number of weavers in Varanasi. Likewise, most government schemes don’t reach them as “big weavers” grab opportunities through their proximity to administration and politicians.

“Those fake leaders also portray false shiny picture of this sector to mislead the people and the government both,” said Jamil, adding that due to such apathy, most weavers want their children to leave the family tradition and find a lucrative business or other jobs.

What does the government say?

Government officials seek to downplay the issue. Citing provisional figures, they claimed an annual turnover of handloom and powerloom sectors in the Varanasi region in 2016-17 was nearly ₹804 crore and ₹7,260 crore respectively. They didn’t share the data of the previous year for comparison however.

In a guarded response, Dr Nitesh Dhawan, Assistant Commissioner, textiles (Varanasi region) told Newslaundry,“The perception that GST burden would be passed to small weavers by traders is not correct. There would be no burden on weavers whose annual income is less than 20 lakhs. There is a psychological resistance about being taxed and filing returns online as they are not used to it.”

Admitting that inter state trade is “one issue that needs to be addressed”, Dhavan insisted that GST will have an overall positive effect because many of the manufacturers and traders would come under the tax net.

Anwar (20)

He admits there is a scope for improvement in CFCs as far as out reach is concerned.

“We try our best to cover beneficiaries under different schemes but there is always some room for improvement. We are far ahead from other regions of the State as far as coverage of weavers under different schemes is concerned,” claimed Dhavan.<

The Varanasi Weavers and Artisans Society (VWAS): 
It was established in 2015 with a vision to rejuvenate authentic weaves through design, marketing and enterprise support to the weavers. The VWAS is supported by the UK government and an international NGO. Most weavers haven’t heard of the society.


Abdul Azim who had hired 22 looms on rent basis till last year due to high demand is now struggling to get work for his own four looms.

It’s website displays a Delhi address and contact numbers. An email sent to the society on Friday evening with a request for an interview didn’t illicit any response till Tuesday.

Where are the fashion designers? 
So, what happened to the much publicised collaboration between big fashion designers from Mumbai who had promised to showcase the talent of bunkars at a national-international platform?

Abdul Rahman who shutdown his looms and now runs a general store, said,“Such initiatives help only handful of big weavers, traders and designers who are already big names in their respective fields.”

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