Comments
There seems to be no end to the woes of the spinning sector in Tamil Nadu. After a sudden spurt in the price of cotton, it witnessed an abnormal drop resulting in a consequent decline in the price of yarn, huge accumulation of yarn stock, closure of dyeing units in all textile clusters including Tirupur due to pollution problem, not withstanding the acute power shortage.
The sector, which accounts for 47.5 per cent of the spinning capacity and 60 per cent of yarn export from the country is today in dire straits.
Expressing concern over the issues impacting the spinning sector, the Southern India Mills Association has appealed to the Tamil Nadu Chief Minister, Ms J. Jayalalithaa, to exempt cotton textiles from VAT.
The SIMA Chairman, Mr J. Thulasidharan, has in a release stated that the spinning sector in the State was in a disadvantageous position due to the absence of raw material base, incurring Rs 4 to Rs 5 per kg for bringing the cotton from States such as Gujarat and selling over 60 per cent of the yarn in upcountry markets, spending equal amount towards transport etc.
“There has also been a pressure on new investments, in modernisation and green-field projects in Tamil Nadu. Many have come to a standstill because of power shortage and high logistics cost,” he said and added that at this juncture, increase in VAT rate on raw cotton from 4 per cent to 5 per cent would discourage any cotton development in the State, as the CST is only 2 per cent.
The SIMA chief further added that the one per cent Market Committee fee on cotton and cotton waste was proving to be an additional burden.
The association has reiterated its appeal seeking an exemption or providing an optional route (as prevails in the case of central excise) for raw cotton and cotton textiles right from yarn to finished goods from VAT for a period of two years to enable the industry to avoid further closures and regain its competitiveness in the open market.
“Hundreds of small and medium mills have come to a halt, stopping production 100 per cent and to minimise the losses, the spinning sector across the country has cut production by 35 per cent from May 24, 2011,” the SIMA chief said, seeking urgent intervention to bail out the sector.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.