Textile industry insist on scraping hank yarn obligation

Texpreneurs Forum,, Secretary D Prabhu stressed the need for rationalizing the MMF (man made fibre) duty structure, total dispensation of hank yarn obligation rule, relaxation in Cabotage law, encouraging spinning mills to tap the solar opportunity and increasing TUF (Technology Upgradation Fund) allocation among others.

With a “little bit of hand-holding and interventions on the part of the government can reignite the investment sentiments and propel growth momentum to a different level.

He pointed out that the Central excise and customs duty structure of the polyester and viscose fibre were counterproductive as Indian manufacturers are non-competitive in the rapidly growing MMF textile market. There is, therefore, a need to rationalize the duty structure of polyester and viscose fibre to enable the domestic industry access such fibres at international prices.

The hank yarn obligation, under which the spinning sector is mandated to produce 40 percent of their total output as hanks against the normal production of cone yarns is outdated as most handloom weavers have either moved to powerlooms or autolooms. Persisting with this age-old rule when the demand for hanks has taken a hit is only leading to corruption, creating undue hardship to the spinning industry, Prabhu explained and sought that the percentage of obligation be reduced to 10 percent.

He said that the cabotage law makes it mandatory to use Indian ships for transporting cargo between ports along India’s coast. If this is relaxed and foreign vessels allowed to operate the cargo inside India, the savings per bale could be phenomenal, particularly because the spinning industry in Tamil Nadu sources its cotton requirement from upcountry markets.

Prabhu also stressed on the fact that the State is facing considerable shortage of power and spinning units (which incidentally are one of the largest consumers of energy) do not have the wherewithal to invest in renewable energy devices.

He suggested that if NTPC ties up with spinning units by installing rooftop panels and entering into power purchase agreement with the respective mills, it would be a win-win situation for both. There is opportunity to install 1,000MW.

The Forum reiterated the need for enhancement in TUF budget allocation to cover backlog issues.