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Rajasthan RMG producers seek zero VAT
Feb '11
The government, during the last budget had revised the VAT on the readymade garments (RMG) from four percent to 14 percent. Particularly, the VAT levy for Rajasthan was set to be the highest in comparison with other states of the country. This thus led to increased cost of domestic products in Rajasthan as compared to similar products in other states.

However, eventually owing to agitation by the traders, the government was compelled to reduce this levy to five percent, but then it still remained to be more than the VAT rate of four percent prevailing in other states, except for in UP, Punjab and Delhi which too were subjected to VAT of five percent.

Thus, the Rajasthan Readymade Garment Manufacturers' Association, by way of a representation has urged the state government to annul VAT imposition on domestically produced readymade garments , so as to ensure growth of RMG trade in the state.

The RMG manufacturers in the state are already in difficulty due to large scale inflow of the apparels in the state from countries like Taiwan, Indonesia, China and Thailand, with a rather more progressive RMG industry.

Meanwhile, the rising cost of production is also causing several production units in the state to shut down. Also the local RMG producers are now shifting their production base to other states with several governmental incentives for the RMG sector like in Gujarat, Haryana and Madhya Pradesh.

The RMG industry of Rajasthan which falls in the category of cottage and small industry, is the second biggest employment generating industry in the state, next to agriculture, and employs female rural workers in various jobs directly or indirectly linked with the sector.

Fibre2fashion News Desk - India

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