A yarn bank has been set up in Ludhiana to facilitate the garment industry in procuring yarn without any middleman. There will be no price issues. Yarn sellers fix rates arbitrarily and yarn prices of yarn fluctuate every day. A few companies had developed a cartel and buyers were being exploited. While input costs were increasing the customer was not ready to pay more.

As of now, only the power loom and loom industries can avail of the facilities at the yarn bank. Knitwear manufacturers also want to be included in the scheme, arguing the procedure of making cloth is the same, the only difference being that the knitwear industry uses machines while the other industry uses looms.

A special purpose vehicle (SPV) has been formed and 13 members have been selected from Ludhiana and who will be purchasing the yarn and will also control its input cost. As much as two crore rupees have been given to the SPV for three years without any interest by the Textile Department. If three to four transactions are done in a year then it can be approved further.

Ludhiana is a hub of the knitwear industry and has around 5000 units with a majority of them in the medium and small scale sector.