Hank Yarn Obligation

Hank yarn obligation in Textile Sector

The hank yarn obligation scheme was designed to provide hank yarn to handloom weavers at a reasonable price and in a timely way. The scheme makes it compulsory for yarn spinners to earmark certain per cent of their production for handloom weavers. Spinners are typically less keen to reel cone yarn into hank yarn as the process adds to their costs, yarn in that form garners a lower price in the market and it services a diminishing market. Additionally, as many spinners also operate powerlooms, they favour cone yarn to supply their own production. Uneconomical and out of step with the current large-scale, mass production of cone yarn, hank yarn production was falling and as a result handloom weavers were increasingly faced with a decreasing supply of their primary input.

Under the first hank yarn reservation scheme, initiated in 1993, private spinners were ordered to produce half of their yarn in hank form, the type of yarn required by handloom weavers. All remaining output could be produced in cone form for sale to textile mills. The goal of the first hank yarn obligation was thus to improve the availability hank yarn at a reasonable price for handloom weavers.

In 2000, the scheme was altered in a way which unfortunately allowed spinners to scuttle their obligations. Alterations gave spinners the leeway to fulfill their obligations through 1) filling the deficit by transferring the obligation on to other spinning mills or 2) by carrying forward the deficit to the following year.

Initiatives like this one and the CENVAT removal effectively subsidize handloom weavers by making yarn cheaper. The production of hank yarn is uneconomical, wasteful, very much labour oriented and impacting adversely on the economic viability of the spinning units. Though supply of yarn to the vulnerable handloom sector is no doubt necessary but it should not be done at the cost of the spinning sector, more so in the context of the on going integration of world textile market.

The conversion of cone yarn to hank yarn is highly labour intensive and mills have to incur an additional cost of about Rs. 2 to Rs. 10/kg. of yarn depending on the counts spun as compared to cone yarn.

.A Hank of Yarn Looks like above. It is used in Traditional Hand-loom Machines as compared to cone yarn in moderen Power Loom Machines. Cone yarn looks like following:-