Textile industry appeals for withdrawal of hank yarn

The textile industry is not looking for sops and incentives, but policy support from the government to remain competitive, aver industry sources.

Listing the industry's expectations, Srihari Balakrishnan, Managing director, Sri Kannapiran Mills Limited, said: “Removal of hank yarn obligation is the need of the hour. While no country has hank yarn obligation in the world, including Pakistan and Bangladesh, India is carrying the burden with 40 per cent hank yarn obligation for spinners and increasing yarn prices for the Indian weaver. Removal of this obligation will make the yarn sector competitive by one per cent in passing the cost benefit."

Indian Texpreneurs Federation (ITF) has in its appeal to the textile ministry sought removal or at least a reduction in hank yarn obligation. “This has been a burning issue for decades. It is now proving to be a deterrent posing unrealistic restrictions on the mill sector,” said Prabhu Damodharan, general secretary of the federation.

The mill sector's requirement analysis of hank yarn has revealed that the total number of working handlooms in the country has tended to slide 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.

“As the handloom fabric production, especially the plain varieties have become economically unviable, the loom capacity has dropped drastically during the last decade," said Damodharan.

Cotton Yarn production

Cotton yarn production, on the other hand, has risen by 133 per cent from 1,321 million kg in 1987-88 to 3,079 million kg in 2009-10. During 2016-17, the spinning sector produced 4,061 million kg of cotton yarn, registering a 207 per cent increase as compared to 1987-88.

“Post the implementation of GST, the demand for hank yarn has further dropped as both - the cone yarn and hank yarn have been brought under the 5 per cent slab,” note industry sources.

As hank yarn obligation is covered under the Essential Commodities Act, penal action could be initiated against the spinning mills for not conforming to the obligation. An urgent policy intervention is, therefore, crucial at this juncture,” said Balakrishnan.

He further said that the inverted GST structure from fibre to fabric in the MMF sector at 18 per cent for fibre, 12 per cent for yarn and 5 per cent for fabric and no refund at fabric stage tended to push the costs up at the fabric stage making the Indian fabric non-competitive. “Rectification of this anomaly would make the fabric competitive by at least 3 per cent,” Balakrishnan said.

“The anti-dumping duty on products such as polyester filament, viscose filament and fibre and acrylics and spandex needs to go to make yarn affordable to our weavers and knitters,” he said, stressing the need for policy intervention and support.

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