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G. Gurumurthy

COIMBATORE, March 6

THE Southern India Mills Association, which has been drawing flak from certain textile manufacturing quarters for its support to the `unbroken' Cenvat chain concept, has said that it would stand by the fiscal restructuring introduced in the form of full `Cenvat' chain for the entire textile industry.

"We are not going to do anything against the `Cenvat' or the `Modvat' chain which the textile industry was demanding for long and which has been accorded in the Union Budget," the SIMA Chairman, Mr V.S. Velayutham, said.

The SIMA's managing committee which met here on Wednesday to discuss the Budget proposals relating to the textile industry and its implications had firmly reiterated that the association would do nothing to dilute the `Cenvat' duty structure or the eight per cent excise duty rate allowed for the cotton yarn sector by the Government, he said.

As for the dissenting voices being heard in the powerloom and handloom sectors on the introduction of excise duty on hank yarn, hitherto exempted from the duty, the SIMA chief maintained that his association viewed the opposition from these sectors as an initial reaction born out of lack of understanding on the operation of the `Cenvat' benefits.

These sectors, which traditionally remained outside the purview of the excise duty (on hank yarn consumed by them), may initially find it difficult to adjust to the new duty regime as it may take some time to sink in. This will only be a temporary phase.

SIMA had conducted a survey among the powerloom and handloom weavers in certain parts of the State to assess impact of the duty on hank yarn and the feedback it got was that the weavers were not unduly worried about the duty, Mr Velayutham claimed.

He said SIMA had wanted the Government to bring down the excise duty on cotton yarn to four per cent with a `Cenvat' chain considering the difficulties experienced by the textile sector.

The Indian Cotton Mills Federation too had made a similar stand. Given the situation, SIMA would only insist on a four per cent excise duty on yarn, regardless of the outcome.

The SIMA committee felt that the additional 15 per cent depreciation allowance permitted in the Budget for industries going for capacity expansion might not be favourable for the textile sector faced with demand recession.

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