The Union textile ministry is contemplating reduction of obligation under the Hank Yarn Obligation Scheme for the cotton spinning mill industry in the country. This follows the industry urging the ministry to rationalise the level of obligation in the wake of decline in demand of cotton yarn from the handloom sector over the years. As per industry sources, the government is favourably considering the demand of the industry which incurs extra cost to meet the obligation under the scheme. Under this obligation, the industry is required to pack 40% of its total yarn production in hank form to be used by the handlooms. The government is looking to bring down the obligation to 30% and thereafter to around 20% in a phased manner.
“I am pleased to inform that the ministry is favourably reviewing the whole scheme, and based on the demand-supply scenario, is planning to bring down the obligation under the scheme. We have to come up with a formula which can be acceptable to all segments of the industry. Our aim is to make the entire industry competitive,” said Smriti Irani, Union Textile Minister at the recently held Global Textiles Conclave 2018 organised by the Confederation of Indian Textile Industry (CITI) during its Diamond Jubilee Celebrations at Vigyan Bhawan, New Delhi.
“This has been our long standing demand. Over the years, the demand of yarn from the handloom sector has come down quite significantly and we sincerely believe that the government needs to rationalise the obligation. This will help the organised mill sector to bring down the cost and improve their competitiveness, it is the need of the hour,” says Sanjay Jain, chairman, CITI.
The Hank Yarn Obligation is a mechanism to ensure adequate availability of hank yarn to handloom weavers at reasonable prices. The existing Hank Yarn Packing Notification (dated 17.04.2003) promulgated under Essential Commodities Act, 1955 prescribes that every producer of yarn who packs yarn for civil consumption, has to pack at least 40% of yarn packed for civil consumption in hank form on quarterly basis and not less than 80% of the hank yarn packed should be of counts 80s and below. The industry players are of the view that the Hank Yarn Obligation scheme has lost its relevance in the changed scenario. “While no country has hank yarn obligation in the world, including Pakistan and Bangladesh, India is carrying the burden with 40% hank yarn obligation for spinners and increasing yarn prices for the Indian weaver. Removal of this obligation will make the yarn sector competitive,” opines an industry player based out of Tamil Nadu.
Reducing the obligation will in no way reduce the supply of yarn to the handloom sector. Over the years, handloom weavers have either moved to powerlooms or automatic looms. Persisting with this age-old rule has only led to corruption, creating undue hardship to the spinning industry, say industry observers.
The mill sector’s requirement analysis of hank yarn has revealed that the total number of working handlooms in the country has declined from 36.10 lakh during the first Handloom census (1987-88) to 31.37 lakh eight years later in 1995-96 and further down to 21.47 lakh looms at the time of the third census in 2009-10. About 29.09 lakh weavers reportedly worked in the handloom sector as per the Handloom Census of India 2009-10, but in 1995-1996, 34.71 lakh were involved. It shows a 16% reduction in 15 years. Uttar Pradesh, West Bengal, Andhra Pradesh, Madhya Pradesh and Tamil Nadu are some of the states which have handloom clusters.