Spinning mill owners of Ludhiana demand level playing field with their counterparts in other states as the spinning industry of Punjab in huge debts and units are closing down due to lack of orders. Punjab government is held responsible for pushing them in a crisis by not reducing rates of Value Added Tax (VAT) on yarn that they manufacture, they said.
Punjab Spinners Association (PSA), has been demanding reduction of VAT from quite some time now. It met deputy chief minister, Sukhbir Badal and the excise and taxation commissioner (ETC) Punjab many a times demanding the same. But this issue remained unsolved.
A meeting was held to address issues of ailing industry on Saturday chaired by industries minister Madan Mohan Mittal. Industrialists apprised the minister of how 10 spinning mills worth close to Rs 800 crore have already shut down in the state. They alleged that this has happened only due to the huge difference between VAT rates of Punjab and other states.
VAT on yarn in many states is either nil or two per cent whereas for manufacturers in Punjab, it is at 6.05 per cent Due to this difference the cost of production of local manufacturers is higher by almost six per cent as compared to the manufacturers of other states. The only solution of this problem is reducing the VAT rate.
Ten mills and 1.5 lakh spindles have already closed down due to huge difference between VAT rates of Punjab and other states, a textile company spokesman said.
