‘Hank yarn obligation a deterrent to growth’

Textile entrepreneurs demand changes to suit today’s need

Textile entrepreneurs from Tirupur and its hinterland are seeing the ‘hank yarn obligation’, an age old stipulation obligating the mills to produce a minimum of 40 per cent of the yarn as hank yarn, as a deterrent to growth and threat to their economic viability.

Though there are certain exceptions provided on the clause when it comes to production of blended and hosiery yarn, this old rule, according to the entrepreneurs, holds no significance at all in the present textile scenario existing in a liberalised economical condition.

They wanted the obligation rule either be scrapped or reduce the obligation limit to 10 per cent.

“Of course, the hank yarn obligation has been drafted long back to ensure that handloom weavers in the country get assured quantity of hank yarn which is their major raw material.

“But with the introduction of schemes like Technology Upgradation Fund Scheme, many handloom weavers have been moving to either power looms or auto looms. Hence, the demand for hank yarn too has been coming down,” pointed out D. Prabhu, secretary of Texpreneuers Forum formed of different stakeholders in the industry.

However, with the obligation clause still in place, the textile units were forced to produce 40 per cent of the yarn as hank yarn without having the adequate demand for the same quantity in the market.

“We have pointed out in our representation to the Union Textiles Ministry that due to the hank yarn obligation rule, about 3.21 crore kilograms of hank yarn is produced in the State in a month against the actual requirement of 16.22 lakh kg. Scenario across the country is also been almost the same,” Mr. Prabhu said.

Textile mills owners in the area were of the opinion that the report of the external agency appointed by the Government to study the repercussions of the hank yarn obligation on textile sector should be released soon.

Hank yarn obligation is an age old stipulation obligating the mills to produce a minimum of 40 per cent of the yarn as hank yarn

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