This paper is an attempt to measure and analyse the demand for a supply of yarn in the handloom sector. It finds that there is a persistent shortfall of the supply of yarn in relation to the demand for it. It seeks to identify and examine the key factors accountable for the shortage of yarn and to explore the possibilities of overcoming the inherent problems.

This paper argues that the shortage in the supply of yarn is more a function of the defective system of yarn distribution than of the total quantity of yarn, both locally produced and imported. This shortage is aggravated by the anomalies emanating from the differences in the counts of yarn. It maintains that there is a concurrent need for liberalising import of yarn until its local production attains self-sufficiency and for formulating an effective system of yarn distribution in keeping with the demand pattern of yarn. The paper concludes with some policy guidelines.