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Govt likely to withdraw cotton tax

, TNN | Apr 4, 2012, 12.46AM IST

NAGPUR: The market was abuzz on Tuesday with speculation that the 5% purchase tax imposed on cotton in the recent state budget announcements was withdrawn. However, there was no official confirmation. But sources in the government indicated that there was growing pressure from legislators and ministers from Vidarbha and Marathwada for removal of the tax. The tax indirectly hit the cultivators as traders passed on the burden to cotton growers.

There are indications that the matter may come up at the cabinet meeting on Wednesday and the government may give some relief by at least bringing the cotton purchase tax at par with other states at 2%. There were reports suggesting that the traders may not be levied the tax for transactions within the state but may have to pay if they want to take the cotton outside the state.

Social justice minister Shivajirao Moghe, who is from cotton belt of Yavatmal, told TOI that he had taken up cotton tax matter with chief minister Prithviraj Chavan who has sought some more time for a decision for sorting it out with the finance ministry.

Vidarbha Jan Andolan Samiti president Kishore Tiwari has criticized the Centre for curbs imposed on cotton exports and said the delaying tactics was only to favour the textile industry which wanted cheaper raw material domestically delinking cotton from global market. Cotton Federation chairman N P Hirani said in view of the poor arrivals of cotton crop in domestic market because of less than expected crop, the Union government may allow only 10 to 12 lakh bales of fresh exports. “The textile and garment sectors are under tremendous pressure from international competition and the government may find it hard to ignore their interests by freeing cotton exports,” he said.

Last Saturday, cotton traders and exporters, had resorted to an agitation at Pandharkawda in Yavatmal against the tax. Seeking its withdrawal, cotton growers as well traders also demanded removal of all restrictions on cotton exports. Currently the Union commerce ministry is only allowing external trade by the land route to neighbouring countries. It is learnt a meeting of group of union ministers to to review cotton exports on Tuesday was deferred.

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