Cess exemption to bring relief to textiles sector

New Delhi, May 25 | Updated: May 26 2007, 05:30am hrs
The government has decided to exempt all products in textiles chain and textile machinery manufactured in India from textile committee cess.

The abolition of 0.05% cess of the turnover would enhance the competitive edge of the Indian textile industry in global market by reducing transaction costs on garment exports.

When launched, the cess was 0.025% of the turnover, which was raised to 0.05% and has been continuing since 1977. Rsv 50 crore was collected annually and deposited in the Consolidated Fund of India. Grants are then released to the textile committee.

Last year, the cess of O.025% was abolished on clothing and subsequent abolition on textiles and textile machinery benefit the domestic industry to the tune of about Rsv 30 crore from this year, industry sources told FE.

However, it made up the deficit by earning a considerable amount as consultancy fee, sources added.

Welcoming the move, The Confederation of Indian Textile Industry (CITI) said the Textiles Committee Cess, initially charged at a rate of 0.025% has outlived its utility long back and was an avoidable burden on the industry. The cess, though meant for running the textile committee, was more than three times the amount required for running the affairs of the committee.

At a time when the industry is faced by steep appreciation of the Rupee, high raw material prices, continuing rise in interest rates and demand recession in some major markets like USA, the decision to abolish the cess will provide the industry some relief, CITI chairman, Shekher Agarwal said.