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SIMA Chairman welcomes CM decision on removal of VAT

23 Jul '11
2 min read

The predominantly cotton based textile industry has been facing a grave crisis across the country particularly in Tamilnadu, which accounts for 47.5% of the spinning capacity, 60% of yarn exports, 1/3rd of the textile business, employing 50 lakh people, particularly rural masses and women folks.

The Government of Tamilnadu while enhancing the VAT rate from 4% to 5% from July 11, 2011, also brought the cotton fabrics under the VAT net, which had been all along exempted. A majority of the spinning mills are incurring huge cash losses due to crash in cotton and yarn prices following the unprecedented glut in the domestic and international markets and have reduced the production to the tune of 40% from 24th May 2011 to minimise the losses.

The levy of 5% VAT on fabric would greatly affect the powerloom sector which uses hank yarn and also yarns purchased from other States by paying 2% CST. Against this background, The Southern India Mills' Association (SIMA) had appealed to the Hon'ble Chief Minister of Tamilnadu to exempt fabrics and its related products from VAT so as to enable the textile industry in Tamilnadu to sustain its competitiveness and regain its growth. The Hon'ble Chief Minister was kind enough to remove the 5% VAT on cotton fabrics and its related products.

In a press release, Mr.J.Thulasidharan, Chairman, The Southern India Mills' Association (SIMA) has profusely thanked the Hon'ble Chief Minister of Tamilnadu for favourbly considering the representation of SIMA and removing the VAT on cotton fabric and its related products. Mr Thulasidharan also thanked the Government for collecting various statistics from the Association, making an in-depth analysis of the same and removing 5% VAT on cotton fabrics and its related products.

SIMA Chief has stated that the decision of the Government in removing VAT on cotton fabrics is in the right direction, which would greatly benefit the powerloom sector and also knitted garment sector in Tirupur, made-up sector in Karur and Madurai. Mr Thulasidharan informed that the textile sector was in the reviving mood and would regain its competitiveness once the Central government also announces a bail out package and restore export benefits.

SIMA Chairman has also thanked the Hon'ble Chief Minister of Tamilnadu for taking various steps on a war footing particularly issues relating to power and pollution.

The Southern India Mills' Association (SIMA)

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