KNITTING THE DEMAND CHARTER

New Delhi, June 21: Large textile millowners have demanded the removal of excise duty exemptions granted to powerlooms and small garment makers on the ground that a broken Cenvat chain implies trouble for the industry and lower revenues for the government.

Indian Cotton Mills Federation (ICMF) secretary general D. K. Nair said, “There are certain turnover-based exemptions available to powerlooms and garment makers which are doing harm in more ways than one.”

Powerlooms with a turnover of Rs 25 lakh in a fiscal and garment makers with revenues of Rs 30 lakh are exempt from excise duty. Nair said apart from breaking the Cenvat chain between spinning, weaving and garments, there are other loopholes ingrained in duty exemptions which are misused.

Under present rules, this turnover-based exemption is available to any number of units functioning from a given premise. “Using this loophole, the exemption benefit is taken by units whose turnovers are several times more than that stipulated for exemption limits. It is done by splitting turnover, by misrepresenting them as accruals from different units operating from the same premises.

The ICMF represents the interests of the organised textile industry. Its members are not individual mills but associations in regions across the country. Unlike what its name suggests, the association is not confined to units of cotton textiles but includes man-made fibres and blends of these two. There are around 3000 such mills in the organisation.

Some of the prominent mills in the ICMF include Arvind Mills, Bombay Dyeing, Grasim Industries, Indo Rama, Raymond Limited, Indian Rayon, Welspun India Limited and Ginni Filament.

“No more exemptions should be extended to any segment of the textile industry as it will further upset the level-playing field for competing industry segments,” said ICMF chairman B. K. Krishnaraj Vanavaryar.

In a pre-budget memorandum sent to Union finance minister P.Chidambaram, the ICMF has suggested a uniform excise of 8 per cent on all textile segments. In the case of filament-based yarns, it has asked for a duty of 16 per cent for 2004-05 against 24 per cent at present, which should be reduced to 8 per cent in stages.