Hank yarn obligation is an age old proviso compelling the textile mills from Tirupur and its hinterland to produce a minimum of 40 per cent of the yarn as hank yarn that deterrent to growth and threat to their economic viability. The textile entrepreneurs want the obligation rule either be scrapped or reduce the obligation limit to 10 percent.

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

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.

D. Prabhu, secretary of Texpreneuers Forum formed of different stakeholders in the industry pointed out that 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 declining.

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.

Texpreneurs have pointed out in their 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.

The Government has appointed external agency to study the effect of the hank yarn obligation on textile sector. The textile mills owners are now awaiting form the release the report soon to arrive at a conclusion.