Yarn coming out of mills in Tamil Nadu has dwindled. Reason: the currency ban. Migrant laborers are unable to come to work because they don't have bank accounts. Opening a bank account is an issue as they do not have identity proofs. Many of them have returned to their hometowns and will come back only when there is sufficient cash flow in the market.

With shortage of labor, owners of spinning mills are unable to run their units on a daily basis. The number of shifts has come down to two or one per day. With inadequate workforce, they are unable to carry out production to capacity. Losses incurred due to fall in production have doubled. Yarn exports have come down.

With a fall in yarn supply, weaving units have also shrunk their output. Most weaving units have temporarily closed. They only function two or three times a week or may be for festivals or important orders.

Also powerloom owners have not been able to provide full wages to their weavers and others in the industry due to demonetisation. As it is the textile industry in Tamil Nadu has been having dull business for two years.