Tamil Nadu - Coimbatore   

Textile industry awaits decision on CENVAT

By Our Staff Reporter

COIMBATORE, JUNE 30. A year after the implementation of the unbroken CENVAT (Central Value-Added Tax) chain for the textile industry and with the Union budget round the corner, the industry is now keeping its fingers crossed on the future of the levy.

This levy has evoked opposite reactions from certain segments of the textile sector.

According to sources in the organised sector, the CENVAT chain has provided a level-playing field and the organised sector has started making investments in the weaving and garmenting segments to take advantage of the opportunities in the post-2004 scenario.

According to the Southern India Mills' Association, ``the CENVAT chain has given a fillip to fabric and garment production in the organised sector.''

The sources said if the CENVAT system was to be disturbed, it would have a ``cascading effect,'' affecting the entire textile production chain, including unorganised sectors.

Hence, according to the SIMA, the CENVAT chain should be kept ``intact.'' The Indian Cotton Mills' Federation has stressed the need for ``avoiding excise exemptions for any segments and to strengthen the CENVAT chain to ensure proper compliance with excise duty stipulations by all segments of the industry.''

However, M.S. Mathivanan, president, Textile Association (India), said a large number of powerlooms in the State were not functioning, hit by the levy of powerloom CENVAT.

Further, a number of weavers sold goods in shandies and they were unable to cope with the formalities of excise rules. He suggested that the ``optional'' system which existed in 2002-03 be restored.

An Erode-based master weaver points out that the problems of wastage and rejection of goods were unavoidable in business.

The ``genuine'' practical difficulties involved in complying with the rules of the CENVAT system needed to be addressed and the procedures simplified, he pleaded.

M. Senthil Kumar, chairman, Powerloom Development and Export Promotion Council, said that with the levy of excise duty on powerloom fabric, the cost of cotton textiles went up. The ``non-Modvatable'' levies should be removed by the Centre and State Governments, he said.

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