The Hindu Business Line : Don't expand excise exemptions, says cotton mills body

THE Indian Cotton Mills' Federation (ICMF) has urged the Finance Minister, Mr P. Chidambaram, to refrain from expanding the coverage of excise exemptions to more segments of the textile industry.

The federation has in turn asked the Finance Minister to further strengthen the Cenvat chain and ensure proper compliance of excise duty regulations by all segments of the industry.

"Expanding the coverage of exemptions will only help large operators in the textile market to evade excise duty and render duty paying units even more unviable," Dr B.K. Krishnaraj Vanavarayar, Chairman, ICMF, said.

In the pre-Budget submissions to the Finance Ministry, the ICMF has held that self-employed and small entrepreneurs in weaving and garmenting already have adequate relief in excise duty.

ICMF has said that the existing exemptions effectively cover even fairly large establishments since the turnover-based exemptions are available for any number of units functioning from a given premises. Hand processors are also completely exempted from excise duty.

ICMF has suggested that no more exemptions or concessions may be extended to any segments of the industry since that would further upset the level playing field for competing industry segments. The federation has also recommended that the excise exemption for more than one unit operating from a given premises may be withdrawn in the forthcoming Budget.

The ICMF has held that the turnover-based exemptions currently available for powerlooms and garments should be withdrawn or at least reduced to Rs 10 lakh.

To attract more investment in the sector and to achieve economies of scale, ICMF has recommended that all textile segments should have a uniform basic excise duty of 8 per cent. In the case of RFY/POY/texturised yarn, ICMF has recommended excise duty of 16 per cent for 2004-05, as against 24 per cent now. The federation has said that the duty may be reduced in stages to 8 per cent, as recommended for other segments.

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