Punjab Industry cheers with reduction of VAT on cotton and other types of yarns

Say a big thanks to Deputy CM & term decision as “pro-industry”, “pro-Punjab” and “consumer friendly”
Ludhiana, March 17, 2016: A wave of jubilation prevails among the industry after the announcement of reduction in value added tax (VAT) on cotton and other types of yarns excluding polyester filament yarn, from 6.05% to 3.63%. Industry has been taking up this demand with the state government for the last about six months, giving representations with the request to accede to their demand. In-fact, the industry has been getting uncompetitive with many other states due to higher rate of VAT in Punjab as compared to many other states.
“We are highly thankful to the Punjab deputy chief minister Mr Sukhbir Singh Badal, on whose initiative VAT on cotton and other types of yarns excluding polyester filament yarn has been reduced from 6.05% to 3.63%”, said Mr Kamal Oswal, CMD, M/S Nahar Group of Industries in a statement here today. He added Mr Badal has also proven once again that the Punjab Government has been following “pro-industry” policies.
Mr Oswal said the decision has also indicated that Punjab Government has a great vision for encouraging the industries in the state. He hoped that the decision of the state government would provide a great relief to the industry. Previously, the yarn was being imported from other states, including Delhi, Uttar Pradesh and Himachal Pradesh where the rate of VAT was much lesser as compared to that in Punjab. As a result, not only the spinning mills were suffering loses but the Punjab government was losing its revenue. The state government was yielding no revenue on the yarn imported from other states. It had also been putting adverse effect on employment generation in the state, he said.
Further, Mr Oswal said, with the recent development, there is now a “level playing field” in Punjab as compared to other states where VAT on cotton and other types of yarns was even between 0% and 1%. He hoped that the decision would give a big boost to the spinning industry in Punjab.
Giving his reaction over the state government’s decision, Mr Sanjeev Garg, MD, M/S Garg Acrylics Ltd., said about Rs.20,000 crores yarn is consumed per annum in Punjab. Of this, yarn worth about Rs.8,500 crore per year was being imported from other states due to higher rate of VAT in Punjab, he said, adding many other states where VAT was lesser compared to Punjab, were ultimately getting advantage of the situation. Now, there is a “level-playing field” with the recent decision taken by the Punjab Government. He hoped that the recent decision of Punjab Government would prove a boon for both the industry and the state government. The latter will now get higher revenue, he hoped.
Mr Gagan Khanna, MD, M/S Arisudana Industries Ltd., said previously, the “outside industries” had been getting promoted due to the discrepancy in VAT rate. He said the local industry had been taking up the matter of reducing VAT in Punjab for the last about six months and finally, in the state government had acceded to their demand in the larger interest of the industry, state and the consumers as well. He hoped that the rates of manufactured items would also get cheaper with the reduction in VAT on cotton and other types of yarns and the ultimate beneficiaries will be consumers. Besides, it will increase state government’s revenue and put a check on the practice of buying yarn from outside Punjab, he said.
Other leading industrialists, including Mr Munish Avasthi (M/S Sportking India Ltd.), Mr Adish Oswal (M/S Vardhman Polytex Ltd.), Mr Akhil Malhotra (M/S Shiva Group), Mr Ashu Jain (M/S Sharmanji Yarn) and Mr Sanjay Garg (M/S Longowalia Yarns Ltd.) have also expressed similar views and hailed the decision taken at the initiative of deputy chief minister, Mr Sukhbir Singh Badal. They have hoped that the decision would go a long way in encouraging the industrial sector of the state in the time to come and set new milestones of development and industrial growth.