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Power, ST hike: `Bitter pill' for TN textile units

Our Bureau

COIMBATORE, Nov. 29

THE restructuring of the power tariff and sales tax has come as "bitter pill'' for the textile industry in Tamil Nadu. Different sectors of the industry feel that nothing is as ill-timed as the revision in rates, given the difficult market situation.

"We expect the production cost in powerloom to go up further due to the hike in the power rate for the weavers, which will make our textile products increasingly uncompetitive in our exports,'' said Mr Senthil Kumar, Vice-Chairman, Powerloom Development and Export Promotion Council (PDEXCIL).

The cotton knitwear producers in Tirupur are crest-fallen with the Government reintroducing the sales tax on knitted garments after three years. But what has made matters worse this time is that the rate of the levy now being pegged as the floor rate has been doubled to 4 per cent as against the previous 2 per cent. The ST on knitwear was withdrawn during the previous DMK regime.

The South India Hosiery Manufacturers Association (SIHMA), whose executive committee met on Thursday, has called for a meeting of various knitwear trade/representative bodies on Friday to protest the inclusion of knitwear into the ST net, Mr Mohan P. Kan dasamy, President of the association, said. It has proposed to call members from all political parties and trade unions, including the people's representatives in the State Assembly, to the meeting, he told Business Line.

Though industrial consumers have been given power rate reduction, the increase in the `maximum' demand charges levied would finally increase the power bill burden on the textile industry as several sick textile mills or those working below capacity would suffer higher charges on the weight of `installed capacity' rather than actual utilisation, said Mr Senthil Kumar.

Reacting to the power tariff hike, the President of the Tirupur Exporters Association, Mr Sakthivel, said at a time when the garment exporters were facing severe competition in the export market, the increase would raise the cost of production in the kni twear industry. Seeking a roll back in the hike, he suggested that alternatively, the Centre could permit the supply of diesel oil at international prices to exporting units, which rely on captive generation.

The introduction of entry tax has also come as a rude shock to many textile units, which are dependent on captive power. Several textile units in Tamil Nadu, according to sources, currently receive diesel and low sulphur heavy stocks supplies from Kerala and Andhra Pradesh by paying 4 per cent CST. These units are aggrieved over the introduction of the entry tax as this would make their captive generation costlier.