Cap on cash withdrawal will hit industry: Trade bodies

Industry bodies here today sought the Centre's intervention to avert a payment crisis post demonetisation, saying the cap on cash withdrawal will impact daily functioning, especially that of SMEs and the construction sector.
In a memorandum to Prime Minister Narendra Modi, the the local chapter of Indian Chamber of Commerce and Industry (ICCI) has raised serious concerns about the withdrawal cap, saying it will impact the day-to-day functioning of the industry.
The SMEs, which are primarily component suppliers to large and medium industries, rely heavily on cash transactions for ease of operation and not for tax evasion, President of ICCI, Vanitha Mohan said.

"Because of the sudden move, their cash boxes have gone dry and almost all the SMEs will be paralysed by Monday," she claimed.
The effect is expected to spill over to overall production and the cap on withdrawal of Rs 20,000 per week has led to a cash crunch that are "certain" to upset labour payments.
A significant percentage of the workers is migrant labourers without bank accounts and they have to be paid on a weekly basis, industry associations pointed out.

Saturday being the day for payment of weekly wages, they are at a loss to make the weekly payouts.

"With just one more day left to come up with a solution to our problem, we seek your intervention to facilitate the same so that the SMEs don't come to a grinding halt," they said.
Nine textile associations, SIMA and SISPA, manufacturers such as COINDIA, COSIEMA, SIEMA and realtors CREDAI are the signatories to the memorandum.
Coimbatore, known as the Manchester of South India, is home to several small, medium and large textile mills.