As production in spinning mills has come to a grinding halt since demonetisation, sales of yarn in western Tamil Nadu have plummeted. As a consequence, yarn stocks are piled up in city mills most of which rely on migrant labourers who have stopped work.

With shortage of labour, owners of spinning mills are unable to run their units on a daily basis. As a consequence, the number of shifts has come down to two or one per day. With inadequate workforce, mills are unable to carry out production to the capacity. This has resulted in piling up of yarn stocks. On any given time, most big spinning mills have stocks of 15 to 30 days. Now, it has piled up to three or four months.

The loss incurred due to the fall in production has doubled. The textile industry has been facing a dull market in the past two years. Yarn exports have come down as a result of which it has been a loss of anywhere between 15 to 25 per cent as compared to the business two years ago.