SISPA seeks VAT reduction on cotton

COIMBATORE: The South India Spinners Association (SISPA) has asked Tamil Nadu Chief Minister J Jayalalithaa to reduce VAT on cotton, cotton yarn and man-made yarn to two per cent from the present five per cent.

Stating that Tamil Nadu has a share of around 55 per cent of the total spinning capacity in India, SISPA president C Varatharajan said, "Since cotton production in the state is not sufficient to meet the needs of mills here, they have to source it from other states.

"Considering that the logistics cost was an added one and was increasing gradually over the years due to fuel price and various other factors, their production cost was on the higher side, making them less competitive compared to the peers in other states."

Sale of cotton yarn in Tamil Nadu attracts five per cent Sales Tax, whereas it is only two per cent for yarn from neighbouring states.

This difference also increases the cost of finished goods within Tamil Nadu and on inter-state sales, making them expensive as compared to the price of yarns from other states, Varatharajan claimed.

Considering this, SISPA wants VAT to be reduced to two per cent on cotton, cotton yarn, blended and synthetic yarns to safeguard the spinning industry in the state and save the livelihood of lakhs of workers in textile industry, he said.

Besides, Varatharajan asked for abolishing the one per cent market cess levied on cotton waste.