Handloom weaving is a labour intensive occupation spread throughout the country, mostly in villages. The handloom sector employs over 43 lakh persons in weaving and allied activities (as per handlooms census of India 2009-10). The main raw material used by this sector is yarn, which is being produced by spinning mills. The yarn trade was controlled by the traders and most of the handloom weavers were dependent on the traders for their yarn requirement. This had resulted in unchecked escalation in yarn prices and shortage in its availability.
Government of India had felt the need for the formation of a national level apex body to overcome those problems by effective intervention in the yarn market and therefore, set up the National Handloom Development Corporation (NHDC) Ltd., a Government of India undertaking in 1983. The main objective of NHDC is to make available to weavers throughout the country, yarn of the appropriate and required quality, through a well-ordered system. The yarn manufactured in a particular place is based on the quality of cotton available in and around that place, while the yarn consumed by the weavers in a particular area is based on the consumption pattern prevailing in that area. Therefore, in most of the cases, weavers have to depend on the yarn produced in other areas. The transportation of yarn from one place to another, increases the cost of yarn considerably putting the weavers at a disadvantageous position. Keeping the above in view, Government of India introduced a scheme for Supply of yarn at the price in which it is available at the Mill Gate in 1992. Under the scheme the transportation expenses involved in supply of yarn are reimbursed by the Government of India. The nodal agency for the implementation of this scheme is NHDC.
Government of India has also been providing equity to the NHDC for strengthening its activities. Since strengthening of NHDC by enhancing its capital base is an integral part of its main activity i.e. implementation of the Mill Gate Price Scheme, it has been considered appropriate to merge the component of Investment in NHDC with the Mill Gate Price Scheme. Further, to mitigate the cost disadvantage of handloom sector, the Government of India has included one more component of 10% Price Subsidy on Domestic Silk and cotton Hank Yarn under Mill Gate Price Scheme during 2011-12 to ensure availability of cheap yarn to Handloom Sector. This is in addition to the transport/freight subsidy being already offered under our Mill Gate Price Scheme. Thus
this scheme titled Yarn Supply Scheme has three components, namely, (i) Supply of yarn at Mill Gate Price (ii) 10% Price Subsidy on cotton hank yarn, domestic silk and wool (iii) Investment in NHDC.
2. SCOPE OF THE SCHEME
2.2 All types of yarn required for production of handloom items can be made
available at mill gate price. The mill gate price means the price at which the yarn
is procured from the registered license holders of silk exchange in case of
Indian silk yarn, ex-ware house price for DGFT registered importer and
landed price (inclusive of C&F and any other applicable port charges) at
Indian ports for import by NHDC in case of imported silk yarn, state bodies
engaged in manufacturing/ supplying silk yarn, reelers/ twisters registered with
SERIFED, manufacturers of domestic silk/ coir/ jute yarn and pashmina fibre,
processors/ dye houses in the case of dyed/ processed yarn and reputed spinning
mills in the case of cotton and other types of yarn. In the case of silk yarn and
dyed/processed yarn, NHDC should ensure that all payments from user agencies
and NHDC would be made through A/C Payee cheque drawn from their own
bank accounts or by RTGS/ NEFT. However, the individual weavers may make
payment through cheque/ demand draft/ cash to NHDC for getting the yarn
(% of value of yarn supplied)
(% of value of yarn supplied)
(c) For supply in North Eastern Region:
(% of value of yarn supplied)
5.3 Presently NHDC is supplying yarn directly from the place of mill to the place of
handloom weaver/ agency. NHDC places order on mill after getting the corresponding
indent from the handloom weaver/society. This involves a delivery period of 10-15 days
from the mills in southern states to the handloom weavers/agencies in northern states and
30-60 days to the handloom weavers/agencies in north-eastern states.
Note:- Above state Vat information has been taken from the website of respective states as on 29.08.2013. 6. Under the existing MGPS, the transportation reimbursement is allowed from the place of mill to the place of handloom weaver/ agency. Since, it is being proposed that NHDC shall open the warehouse, it is, therefore, necessary that transportation reimbursement under YSS shall include-
(i.) Transportation charges from mill to NHDC warehouse plus
(ii.) Transportation charges from NHDC warehouse to the place of the handloom weaver/ agency.
5.4Where NHDC will supply yarn for delivery directly i.e. not through yarn depots, NHDC shall be reimbursed only the freight reimbursement and service charges as mentioned in Paragraph 5.2.
5.5NHDC needs to meet freight cost on differential basis out of the subsidy received by it, as per Paragraph 5.2. The rate of reimbursement has been calculated based on the volume and trends of prevailing price and freight charges in transporting the yarn from the mills to the agencies. Prioritization of area is needed to give emphasis to North Eastern and Hill/Remote region.
5.6Besides the cost of yarn, NHDC shall also bear the transportation expenses on the yarn supplied from the point of procurement, i.e., spinning mills/ registered licence holders in the silk exchange, state bodies engaged in manufacturing/ supplying silk yarn, reelers/ twisters registered with SERIFED, manufacturers of domestic silk/ coir/ jute yarn and pashmina fibre and process/ dye houses in the case of processed/ dyed yarn etc. to the point of delivery i.e., the godown of the agencies situated in their operational area. To facilitate easy accounting of the transportation cost, NHDC shall forward the goods on freight to pay basis and the amount paid by the user agencies shall be reimbursed to them in full by NHDC, on submission of claim bills supported with LR/GR etc. The actual cost of transportation or the rates of freight reimbursement mentioned in Paragraph 5.2, whichever amount is less, will be allowed. NHDC shall be reimbursed this amount by Government of India on Bi-monthly basis. The payment for transportation charges to the user agencies by NHDC shall be made through cheques drawn on its own bank account or by RTGS/ NEFT. In no case, shall NHDC make direct payment to the transporters either in cash or through cheque or RTGS/ NEFT. The details of yarn purchase, transportation etc. must be furnished by the user agency in the format prescribed in Appendix B to ANNEXURE - II.
5.7As far as possible, NHDC should draw up a viable procurement plan much in advance, in order to ensure that the supplies are made without interruption from the nearest mills situated in the same or nearby states. 5.8The Governments assistance is payable only after the yarn sold is actually delivered to the user agency. The assistance at the prescribed rates will be payable on a Bi-monthly basis on production of audit certificate by NHDC in the form prescribed by the Office of the Development Commissioner (Handlooms) (ANNEXURE -II and Appendix A to ANNEXURE -II).
This certificate will have to be issued by a Chartered Accountant. The audit certificate shall be supported by the agency-wise details of yarn supplied (Appendix-B to ANNEXURE II) to be furnished separately by each user agency. The agency shall also furnish to NHDC a copy of LR/GR etc. with its claim.
5.9The Governments assistance at the prescribed rates will be paid in full after the submission of the audit statement, which will be scrutinized by the Office of the Development Commissioner (handlooms). In order to enable timely reimbursement of the transportation expenses incurred by the user agencies, NHDC shall be advanced a sum not exceeding Rs.100.00 lakh at the beginning of each month to be adjusted against the final claims for the corresponding quarter subject to the condition, that the accounts for the advance given to NHDC in previous years are fully settled by NHDC.
6. OPERATION OF DEPOTS:
6.1 OBJECTIVE: Handloom Weavers have been constantly facing problems in the timely supplies of yarn in remote, interior and distant places. It is necessary that infrastructure be developed and optimally utilised in these areas to facilitate timely supply of yarn. To encourage various agencies to operate depots on a continuous basis, all categories of yarn (i.e. yarn procured under Mill Gate Price Scheme and also yarn procured directly by the agencies) shall be supplied through yarn depot. However, the value and quantum of yarn supplied by NHDC under Mill Gate Price Scheme only shall be counted for reimbursement of depot operating charges. During the XI Plan period, the NHDC should set up more yarn depots with better and wider spatial distribution.
All agencies as covered under Paragraph 2.1 will be authorized to operate depots.
Location of these depots shall be decided by the agency with the concurrence of NHDC.
6.4 Although no new staff shall be engaged for operating the depots, the expenses in operating the depots shall be reimbursed to the operating agency by NHDC as per rates specified at para 5.2 (a), (b) and (c). NHDC shall be reimbursed this amount by Government, based on actuals, out of the provisions for Yarn Supply Scheme on submission of claim to NHDC in Appendix C to ANNEXURE -II.
7. OPERATION OF MOBILE VANS:
To reach the weavers in remote areas, agencies need to operate mobile vans, periodically so that weavers are not affected due to non-availability of yarn.
All agencies as covered under Paragraph 2.1 will be authorised to operate mobile vans. However, the agencies which are authorised to operate depots will not be permitted to operate mobile vans.
Upto 40 mobile vans could be operated in such a manner that facility of at least one mobile van is available in each state. Additionally, operation of more mobile vans can be considered with the approval of the office of the Development Commissioner for Handlooms. Preference will be given to the North East region and hilly areas. For providing this facility to remote areas in the rest of the country, Office of the Development Commissioner for Handlooms will identify the remote areas in consultation with the Planning Commission.
A mobile van could be operated for 20 days in a month by the agency. Reimbursement on running the mobile vans will be @ Rs.1,500/- per day or actual expenditure, whichever amount is less. Mobile van may also be utilized for procurement of handloom clothes and to that extent expenditure would be included within the overall ceiling given above.
Expenditure for the operation of mobile vans will be reimbursed to the agencies by NHDC. NHDC will be reimbursed this amount based on actuals along with the reimbursement as per Paragraph 5.2 of the guideline on receipt of audited claim in Appendix D to ANNEXURE -II along with regular reimbursement of freight charges
The reimbursement to NHDC for the operation of mobile van, in addition to the flat rate of assistance mentioned at Paragraph 5.2, will be limited to a maximum of Rs.36.00 lakh per year.
Managing Director will be responsible for monthly monitoring of the scheme and will send report to the Ministry of Textiles indicating the progress under various component viz. yarn type- cotton, silk, jute/coir and wool and others and hank yarn and cone yarn and also highlighting the progress made in hilly and North Eastern regions.
The implementation of this component will be monitored by the Board of Director of NHDC and the Office of the Development Commissioner for Handlooms regularly.
There is a need to widely publicize the benefits of the Yarn Supply Scheme. Focused publicity of the scheme will be done through newspapers in vernacular languages, printing and distribution of pamphlets and hand bills, pasting of posters, wall paintings and Buyers-Sellers Meets etc. Publicity of the scheme will be done by National Handloom Development Corporation, expenditure on which will be reimbursed by the Office of the Development Commissioner for Handlooms.
10. 10% PRICE SUBSIDY ON HANK YARN:
To mitigate the cost disadvantage of handloom sector, the Government of India in the past exempted cotton hank yarn used by the handloom sector from excise duty, whereas cotton cone yarn (used in powerlooms and mills) had 9.2% CENVAT levied on it. Subsequently, in 2004, CENVAT on cotton cone yarn was also removed. As a result, the price differential between the two vanished and handlooms no longer enjoyed price advantage in the crucial raw material. Since handloom products are inherently more expensive due to long lead time in weaving due to complex and exquisite designs, and lower productivity as compared to powerloom, it is essential to provide explicit subsidy on hank yarn
In view of the above, it has been decided to provide 10% price subsidy on Hank Yarn distributed in the handloom sector. The subsidy will be provided upfront to the beneficiary. This will ensure that the price advantage, which was available to handloom sector prior to abolition of CENVAT on cone yarn, will be made available to it again. This will not only help the handloom sector to survive and become self sustainable in the long run but also enable them to compete with powerloom products.
It has also been decided that 10% subsidy would be available on wool also
10.2 Implementing Agencies
National Handloom Development Corporation (NHDC) will be the sole implementing agency
10.3 Beneficiary Agencies:
The agencies which will be eligible to receive subsidized yarn under the Scheme are as under :
10.4 Types of Yarn and Eligible Quantity
(i) Domestic Cotton, Silk, Woollen required for production of handloom items
will be covered under the 10% price subsidy.
Cotton (upto 40s counts) 30 Kgs./loom/month
Cotton (above 40s counts) 10 Kgs./loom/month
Silk Yarn 4 Kgs./loom/month.
Woolen Yarn (below 10s NM) 50Kgs./loom/month.
Woolen Yarn (10s to 39.99s NM) 10Kgs./loom/month.
Woolen Yarn (40s NM and above) 4 Kgs./loom/month.
The subsidy on wool would be available to individual weavers and handloom cooperative societies only. For other category of yarn, subsidy will continue as per earlier norms.
The subsidized yarn will be supplied either to an individual handloom weaver or to his agency ( i.e. SHG, JLG, PWCS etc) but not to both.
The agencies, which are having more than one loom, can get the quota allocation for different quality/ varieties of yarn for different looms for getting the supply under 10% price subsidy component, but the individual weavers who are having only one loom have to get the quota fixed for one quality or variety of yarn only, which constitute his major requirement.
(iii)In case of double/ply yarn, the resultant count will be considered for deciding the eligible quantity.
(i) National handloom Development Corporation, which is the implementing agency of Yarn Supply Scheme, will be eligible for an additional 0.5% of the value of yarn as service charge for yarn supplied under the 10% price subsidy on hank yarn component over and above that specified in the Yarn Supply Scheme.
(i) 10% price subsidy on cotton and silk hank yarn will be provided upfront to the
(i) NHDC will verify the looms and collect the relevant data for handloom weavers
cooperative societies, handloom exporters registered with HEPC.
First two digits – State
(vii) Each individual handloom weaver will be affiliated with nearest yarn depot
approved by the NHDC for placing the indent and getting the subsidized yarn.
Name of the yarn depot will be indicated on the yarn passbook issued to him.
(i) In case of yarn supplied under 10% subsidy at a time the requirement upto 3
months can be supplied.
(i) The indent of the individual weavers and other eligible agencies will be routed
through depot operating agency as mentioned in the Yarn Passbook.
10.7 National implementation and monitoring committee (NIMC) will be constituted under the Chairmanship of Secretary (Textiles) with the members from Department of Expenditure, Planning Commission, National Handloom Development Corporation, Ministry of Textiles and State Government Representatives to review the scheme and to approve or amend the operational guidelines without modifying or impacting the financial parameters of the Scheme.
B. INVESTMENT IN NATIONAL HANDLOOM DEVELOPMENT CORPORATION
1 BACKGROUND :
The National Handloom Development Corporation (NHDC) Limited was set up in February, 1983 as a Public Sector Undertaking by the Government of India as an autonomous body under the Companies Act, 1956 in pursuance of the imperative need for a National Level Agency to assist the speedy development of the Handloom sector by coordinating all actions covering the procurement and supply of inputs at reasonable prices, augmenting the marketing efforts of State handloom agencies and initiating developmental activities for upgrading the technology in the handloom sector and improving productivity. NHDC functions under the administrative control of the Office of the Development Commissioner (Handlooms). To strengthen the equity base of NHDC, Government of India has been providing equity @ Rs.1.00 crore every year.
NHDC has been supplying yarn, dyes and chemicals through State Handloom agencies, Apex bodies, Regional Unions, Weavers cooperatives, Handloom Development Centres, Handloom Associations and also Handloom manufacturing units engaged in export promotion. It has been procuring yarn of all varieties, such as, cotton, polyester, viscose, blends, woollen, silk, jute, etc., from more than 522 reputed spinning mills and delivering the same to more than 1271 agencies.
The activities of the NHDC are intended to achieve the following:
· To ensure the availability of raw materials like yarn, dyes and chemicals and other inputs to handloom weavers
· To contribute to the growth of infrastructure and appropriate technology.
·To create marketing opportunities for higher output and to add to marketing opportunities for exports.
· To act as a channel for routing Central Government funds, loans and grants to Handloom Corporations, Co-operative Societies and other bodies or persons engaged in the production and development of handloom sector.
The objective of this component is to provide additional equity to NHDC to enable it to enhance its equity base for availing of the enhanced credit required for its activities including enhancing the volume of yarn supply to the handloom weavers / handloom organizations.
During the XII Plan, Government of India will provide support to NHDC in the form of equity to enhance the equity base of the Corporation to enable it to avail more credit for meeting its financial requirements, subject to the following conditions:
1. A proposal in this regard will have to be approved by the Board of
Director of NHDC.
6. NHDC will ensure the achievement of target/work obligations with reference to the Memorandum of Understanding (MOU) signed between Ministry of Textiles and NHDC.
Format of Undertaking to be furnished by the user agency to the National Handloom Development Corporation under the scheme for supply of yarn at Mill Gate Price
Name and address of the user agency:
i. This society/corporation/agency is engaged in the production of handloom cloth and the yarn procured by the society/corporation / agency from National Handloom Development Corporation (NHDC) under the Mill Gate Price Scheme is meant for captive consumption in our production centres and/or for supply to our member societies/weavers directly enrolled with us.
Signature of Chief Executive Signature of Secretary
1. We have examined the accounts of the National Handloom Development Corporation, Lucknow in respect of supply of yarn made by them to the eligible agencies under theYarn
Supply Scheme for the period ___________________________________________. We are
satisfied that the amounts calculated by NHDC are true and fair.
Date: Chartered Accountant Managing Director (with rubber stamp)
Statement showing agency-wise details of yarn supplied by NHDC under the Yarn Supply Scheme
Name and address of the user Agency
Certified that the above yarn supplies have actually been made by NHDC and the amount of freight has been paid by this corporation/society/agency as indicated above.
STATEMENT FOR CLAIM REIMBURSEMENT OF DEPOT OPERATION UNDER YARN SUPPLY SCHEME FROM USER AGENCY TO NHDC
Certified that the above yarn supplies have actually been made and amount of reimbursement for Depot operation has been paid by NHDC.
Certified that total No. of ……….Vans worked for total No. of ………. Days and the above reimbursement for mobile van operation has been paid by NHDC.
We hereby undertake:
Signature of Chief Executive/Secretary of
Note:- No undertaking is required from the individual weavers
Signature of Chief Executive of Chartered Accountant
Signature of Managing Director of NHDC Chartered Accountant
Appendix ‘B’ to Annexure-IV
Statement for claiming reimbursement against yarn subsidy allowed to the handloom weavers under yarn supply scheme
Signature of Managing Director of NHDC Chartered Accountant