Plea to withdraw agricultural market committee fee on cotton, cotton waste

Representatives of various associations of the textile industry in Tamil Nadu have reiterated its appeal to Chief Minister Edapadi Palanisamy jointly for withdrawal of the one percent agricultural market committee fee on cotton and cotton waste.

SIMA Chairman M Senthilkumar, referring to the market committee fee said that this has been one of their long-pending demands. The former chairman of the Southern India Mills Association S Dinakaran had submitted a memorandum to the then Chief Minister J Jayalalithaa in 2012, but no action has been initiated till date.

The industry experts, emphasizing the need for withdrawing the market committee fee on cotton and cotton waste in GST rate, explained that cotton in all its form — be it kappas, lint and waste is the only input for the textile industry.

The by-products are subject to the fee in the form of an entry tax for sale or purchase in the notified market areas in the southern states and this is in addition to the levies under State and Central enactments. Further, the rates differ even among these states.

The levy becomes a cost on the product since encashment of credit is not permissible. This creates market distortions and multiple licences are required to trade in different market areas, even in the same state.

All this has led to a highly fragmented and high cost agricultural economy, preventing seamless movement of agricultural goods across districts and state borders.

As cotton has already been subjected to market committee fee, there is no logic in levying a fee on cotton waste, as it amounts to double taxation of the product.

Further, the market committee does not play any role in marketing of cotton waste as it is purely dependent on the supply-demand position of the spinning mills. It is a process waste removed during spinning.