The textile industry in India employed many people, so many that the factories bussed people in. But as soon as the U.S. economy slowed down the workers found themselves without jobs. The people then could only find other work that payed half of what they made before.
From this Associated Press article that we found at Oregon Live, writer Erika Kinetz describes the bust of India's textile industry.
Many in the textile belt of south India's Tamil Nadu state have seen their incomes roughly halved, to about $1.50 a day, as factories hit by declining exports and tight credit cut production, are forced to reduce payrolls and eventually close down. Distribution of government subsidized food in the area has shot up, and people are taking out loans and hocking jewelry to meet expenses.
India's public schools are notoriously poor, and many parents work hard to send their children to low-cost private schools that teach English. Now they are pulling them out, cutting off the next generation from what has been the surest ticket to a better life in India: the English language.
During the boom years, textile factories in Tamil Nadu's Coimbatore region could not get enough workers. They sent buses to nearby villages, picking up workers for thrice-daily shifts. In 2005, mills began holding recruitment fairs hundreds of kilometers (miles) away, in Tamil Nadu's impoverished south. Laborers poured in from poor states like Bihar and Orissa. Even on $3 or $4 a day, many built houses and put their children in private English-language schools.
Today many of the factory buses have stopped running, and migrants have gone home.
Things started to go bad in 2007, when the rupee appreciated sharply. Next, due to severe power shortages, blackouts began sweeping Tamil Nadu. Factory owners say they still don't get power for up to 8 hours a day.
From 2004 to 2007, textile production in India grew an average of 9.4 percent a year, according to the Confederation of Indian Textile Industry, a trade group. Growth then slipped to 4.9 percent, and in the year ended March, production actually contracted by 0.3 percent.
The biggest blow was the global financial crisis, which dried up credit and forced Americans to cut back on their shopping. Half of India's textile production is for export, and the U.S. is India's largest market, accounting for over 20 percent of exports. In the first two months of this year, textile imports from India were 11.9 percent lower than they were last year, according to the U.S. Department of Commerce.
Declining demand has tightened an already competitive market. Indian companies complain they are at a disadvantage to poorer nations like Bangladesh, which get preferential trade treatment from developed countries.