Weaving is the oldest industry in the holy city of Amritsar; the textile units here manufacture various kinds of fabrics, including suiting, shirting, tweed, blazers, blankets and women's dress material. Hence the local industry uses various kinds of yarns, the most popular being polyester viscose. Imported yarn and finished fabric from China, Korea, Taiwan, Indonesia and Bangladesh have hit the local textile industry of Amritsar, especially those units who have not modernize their machinery.

The Amritsar Yarn Agents Association (AYAA) president, Kamal Dalmia, said that the association, which had been floated with 60 members in 1989, now had 40 members. The number of agents dwindled after the majority of the obsolete units closed down. Besides, a large number of weaving units shifted to Ludhiana and Bhilwara (Rajasthan) due to the unfavourable policies of the government.

Yarn agents were the mainstay of the business because they worked as a fulcrum between yarn manufacturers based in Ludhiana, Hoshiarpur, Haryana, Himachal Pradesh, Kathua in Jammu and Kashmir, and Rajasthan.

Utilization of yarn has come down due to labour trouble, wrong government policies and failure of the manufacturers to modernize their units.

First inflation must be reined in on the lines of China, banks here must also give loans at about 7 percent rate of interest and income-tax exemption must be raised from Rs 2 lakh to Rs 3 lakh.

Similarly, the excise exemption limit for the textile industry has been Rs 1.50 crore for the past eight years. Keeping in view the inflation, it must be raised to Rs 5 crore because the cost of investment had increased.

The capital investment limit of Micro Small Medium Enterprises (MSME) was enhanced in September 2006 from Rs 2 crore to Rs 5 crore. This needed to be increased to Rs 10 crore now.

It will give the advantage of a low rate of interest on loans. The government offices should deal their cases within the city. Imported machinery is required to modernize the units, rupee has devalued against the US dollar. It is at around Rs 64 per US dollar today.

Besides, import duties must be reduced, power at Rs 7.50 per unit is extremely high while new industry would be offered power at Rs five per unit. All these create imbalance in the industry in the state.

According to an industry expert the textile fabric was no longer an essential commodity because fabric durability had increased. Currently, the textile industry is going through a slump due to steep inflation which need to looking into for the future progress of the textile industry.