Industry body welcomes scrapping of textile cess

The Southern India Mills Association (SIMA) has welcomed the Cabinet decision of May 24 to abolish the Textile Committee cess being collected from the textile and textile machinery industry under the Textile Committee Act.

SV Arumugam, chairman of Coimbatore-based SIMA, stated in a release that the textile cess had outlived its utility long ago and was an avoidable burden on the textile and textile machinery industry.

The Textile Committee cess was introduced in 1977 by the Government of India to fund the activities of the Textile Committee, like pre-shipment quality inspections, promotional activities for exports and research activity, among others.

Initially, the cess was charged at the rate of 0.025 per cent of the turnover, and later increased to 0.05 per cent.

"At a time when the industry is facing serious problems in the context of the steep appreciation of the Indian rupee vis-à-vis the dollar, high raw material prices, high interest rates and demand recession in major markets like the USA, the decision to abolish the cess will render some relief to the industy," Arumugam said.

The textiles, garments and textile machinery industries have for long demanded that the cess be abolished. The Textile Committee cess on garments was abolished last year, following which the industry requested all other products in the textile andmachinery be exempted from the cess.