Textile panel formed to curb vanishing firms

Surat's textile industry has decided to constitute a textile co-ordination committee to formulate a strategy to tackle the problem of textile firms closing down after cheating traders and weavers.

The co-ordination committee will be headed by the Southern Gujarat Chamber of Commerce and Industry chamber president and comprise representatives from weavers' and traders' associations. The decision was taken at a meeting of textile traders' and weavers' association representative at the chamber on Saturday.

This committee would hold discussions at various levels and formulate a strategy to curb the growing instances of textile firms going defunct after defaulting on their payments.

During the meeting, the participants made various suggestions. The South Gujarat Weavers' Association president Jora Patel suggested that registration be made mandatory for all brokers.

He said doing away with illegal transactions would also prove helpful in curbing the number of vanishing firms.

Leading textile trader Amarnath Dora suggested implementation of the system followed by the Delhi Mercantile Association.

Dora said in Delhi, a textile trader is allowed to start business only after he submits all relevant information and details with the association.

Implementation of this system in Surat could be very effective in curbing vanishing firms, he said. The Federation Of Gujarat Weavers' Associations president Manu Patel said vanishing firms are endangering the textile industry.

He said weavers and traders were also at fault.

Patel blamed the police department for the increasing number of vanishing textile firms. Police are not taking any action against the frauds and even protecting them in certain cases, encouraging the frauds, he alleged.

The federation chief said a top police official was not protecting the interest of the local industrialists. After the meeting, the chamber president Ashok Shah said "The meeting was very fruitful as the participants made a lot of useful suggestions. The problem of vanishing firms is very serious and we are confident that a strategy to curb the same will be ready shortly."

Vanishing of three more textile firms in Surat had shocked the industry in the textile hub of the state.

Surat's textile industry, already plagued by various problems including numerous strikes and slump in the market, is now facing textile firms going defunct without making payments to suppliers including traders and weavers. Two to three textile firms stop business in Surat almost every week, duping traders and weavers to the tune of lakhs of rupees.

Around 50 firms have vanished after Diwali, defrauding local traders and weavers to the tune of Rs 100 crore.

A leading textile trader said, "Such firms open shops in the market area first. They build trust among the traders by acting with utmost honesty in the initial dealings. As months go by, they start encashing on this goodwill and start purchasing goods on credit and disappear within a few days."