Punjab's two main industrial clusters -- hosiery and bicycle -- have faced almost 50 per cent drop in production in view of major slump in demand for woollen and bicycles items caused by demonetisation of old notes, industry representatives said.
The "cash crunch" situation has also forced several migrant labourers working in factories to leave for their homes in the wake of "loss of jobs," they further lamented.
With industry feeling that it would take some time to recover from the shock given by "cash crunch", manufacturers apprehended that the state's industrial growth would be hit in coming months.
"Bicycle production in majority of factories here has plunged by almost 50 per cent as retailers and dealers are reporting sharp decline in sales of new bicycles. Customers have almost stopped buying bicycles due to cash crunch," said Ludhiana-based bicycle maker Charanjit Singh.
"Common man is now more worried about saving cash to meet daily needs rather spending on buying cycles or other items which has hit our industry hard," said Singh, who owns Vishavkarma Cycles Industries.
The convenor of Engineering Export Promotion Council's bicycle parts panel, Satish Dhanda predicted 20-25 per cent fall in overall production in bicycles in the country.
"Dealers and shopkeepers are cancelling their orders as sales have been impacted by demonetisation of old notes," said Dhanda, who is also a bicycle maker.
Industry representatives said the problem is so acute that they do not have sufficient money even to pay wages to their workers because of "restrictions imposed" on withdrawal of cash.
"Workers who are not getting their wages are leaving for their homes in Bihar and Uttar Pradesh as majority of factories do not have work. Some manufacturers have even reduced the workforce because of lesser number of orders in their hands," pointed out Dhanda.
Similarly, the hosiery sector, which is one of the oldest and famous cluster, is also feeling the pinch due to scrapping of old notes of Rs 500 and Rs 1,000.
The troubles for hosiery came at a time when it was expecting boost in sales in view of winter conditions.
"Retails sales of woollen items including pullover, sweaters have been hit hard due to cash crunch situation," Duke Group Chairman Komal Jain said.
"Industry is now saddled with inventory of hosiery items in light of drop in sales at retail and dealers end," said Jain while attributing this problem to restriction in cash flow.
Duke, which is a lifestyle brand for apparels, sells its items through 300 exclusive outlets and 3,000 multi brand outlets.
The major impact was visible on small and tiny units which supply items to big units as they lack fresh orders, said industry representative.
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