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| Vol IV | Issue No.14 | February 10, 2003 |
| MESSAGE FROM THE CHAIRMAN | |
 M. Senthil Kumar CHAIRMAN |
Chairman Urges Not To Accept Kelkar Committee Recommendation With Regard To Increase In Excise Duty On Cotton Yarn
It is matter of concern that the Kelkar Committee in its final report has recommended for a steep increase in the excise duty to the extent of 100% in respect of cotton yarn. According to therecommendation, the excise duty in respect of cotton yarn is required to be increased to 16% w.e.f. 01.04.2003 for the year 2003-04 and for the subsequent yearsi.e. 2004-05, 2005-06 |
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and 2006-07, it is to be fixed at 14% as against the current basic excise duty of 8% of 9.2% including the additional excise duty. I do understand that for the purpose of fixing a uniform rate of excise tariff for yarns of all fibers, this suggestion of steep increase in excise duty on cotton yarn has been made by the Committee. Perhaps, while making this recommendation, the interest of the cotton textile industry has been overlooked. The cotton textile industry has been going through a difficult phase. Cotton yarn prices at various production centers recorded a steep increase, necessitating observance of one-day agitation by the textile manufacturers in Solapur. Manufactures find it difficult to adjust to the increase in the cost of basic raw material. Exporters have been showing hesitancy in giving quotations to the buyers, considering the spurt in yarn prices. I, therefore feel that the recommendation by the Kelkar Committee at this stage is not only untimely but also ill-adviced. If the proposal to increase the duty on cotton yarn is considered by the Government, I very much apprehend that it would be the death knell of the textile industry, as it would not be able to absorb the increased cost of cotton yarn. Considering the current state of the textile industry and the need to improve its capability to face the challenges likely to be faced after 2004, in the post quota era, the PDEXCIL in its suggestion for budget proposal for the year 2003-04 has recommended for fixation of zero excise duty on cotton yarn. This proposal has been made keeping in view of the current price situation as well as the need to strengthen the textile industry to make its products competitive in the international market. The proposal made by the Kelkar Committee has therefore not only shocked the industry, but has also placed it in a very piquant situation. There is considerable apprehension in the minds of the textile entrepreneurs, as the proposal to increase excise duty on cotton yarn has far reaching implications. The cotton textile industry, which meets bulk of the fabric requirements of the masses as well as of the clothing and made-ups industry, will be in jeopardy if any increase in the excise duty on cotton yarn is brought into focre. I would also like to mention that if the cotton textile industry is affected, it will ultimately have its repercussion on the agricultural sector, as raw cotton is the basic raw material to the cotton textile industry.
I would, therefore urge not to accept the proposals with regard to increase in excise duty of cotton yarn. I also make a strong appeal to the Ministry of Finance not to consider in particular this aspect of the proposal made by the Kelkar Committee. I also urge the Ministry of Textiles to prevail upon the Ministry of Finance to announce Nil excise duty in respect of cotton yarn at the time of presenting the budget proposals for 2003-04 on 28.02.2003. I must add that the interest of the cotton textile industry lies in making the raw material cost cheaper, through reduction in excise tariff, particularly in respect of a sensitive item such as cotton textiles.
With best wishes. | |
