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The apex body of textile mills, The Southern India Mills Association (SIMA), has appealed to the Tamil Nadu government, to withdraw the hike in VAT on petrol and diesel.
In a communication to the Chief Minister, SIMA Chairman, M .Senthilkumar, termed the hike as unwarranted considering that the Centre has announced implementing the GST from July 1.
Further, this would not only impact the textile industry but also the common man, he said.
The government has increased the VAT on diesel from 21.43 per cent to 25 per cent, which has pushed up its price by Rs 1.76 a litre and that of petrol from 27 per cent to 34 per cent, up by Rs 3.77 a litre.
The textile industry in the state is already in a disadvantageous position as the spinning sector spends around Rs 6 per kg to procure the raw material from upcountry markets, and another Rs 4 per kg to sell the yarn in those markets, while other states enjoy huge incentives.
The present hike in VAT would, therefore, have considerable impact on the transport cost of all items as the textile clusters of different value segments are located in different places, and with the mill sector using diesel generators to tide over load shedding and tripping, it could increase the power cost as well, he said.
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