SISPA demand reduction in VAT rate presently levied on cotton

The South India Spinners Association (SISPA)stating that the cotton production in the state is not sufficient to meet the needs of mills are force to source it from other states have urged the Tamil Nadu Chief Minister J Jayalalithaa to reduce VAT on cotton, cotton yarn and man-made yarn from the present five percent to two percent.

SISPA president C Varatharajan said that Tamil Nadu has a share of around 55 percent of the total spinning capacity in India. Their production cost is on the higher side, making them less competitive compared to the peers in other states. As they has to import from other states, logistic cost is added one and is increasing gradually over the years due to fuel price and various other factors

Sale of cotton yarn in Tamil Nadu attracts five percent Sales Tax, whereas it is only two percent 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 all the factors increasing production cost, to safeguard the spinning industry in the state and save the livelihood of lakhs of workers in textile industry, SISPA wants VAT to be reduced to two percent on cotton, cotton yarn, blended and synthetic yarns.

Besides reducing the VAT, SISPA has also demanded for elimination of market cess which is levied on cotton waste.