Tamil Nadu CM cancels 1 pc entry tax for cotton bales, waste

“Under the Tamil Nadu Agricultural Produce Marketing (Regulation) Act of 1987, one percent is collected as market entry tax for agricultural products. Considering raw cotton, cotton bale, and cotton waste as agricultural products, 1 percent tax is collected as market tax during procurement and sales. However, only raw cotton should be considered as agricultural produce and cotton bale and cotton waste should not be considered as agricultural products and so by considering the long-term demands of weavers and cotton mill owners the state will cancel the market entry tax for cotton bale and cotton waste. An amendment to bring the announcement into effect will be introduced in the ongoing Assembly session,” said Stalin, in the announcement made under Rule 110 of Tamil Nadu Assembly Rules.

Stalin also said that Tamil Nadu contributes one-third of the garment sales in the country and there are 1,570 spinning mills in the state through which 45 percent of the total cotton yarn for the country is produced. However, 95 percent of cotton bale required for the spinning mills in the state is procured from other states. During the procurement of cotton bales from the Indian Cotton Corporation large quantities of cotton, bales need to be stored in markets and apart from paying huge transportation costs, a large amount is also paid as market entry tax.

After the DMK government took charge there were demands from weavers to cancel the market entry tax. Considering their demand, the state canceled the tax, the Chief Minister said.

Textile trade bodies have welcomed the announcement. Chairman of Confederation of Indian Textile Industry T Rajkumar told reporters on Saturday that the scrapping of cess, which was a long-pending demand, would benefit cotton farmers and the industry across the cotton textile value chain.

The Southern India Mills’ Association lauded the decision on the revoking of the tax as it would benefit two lakh farmers and help increase cotton production from five lakh bales to 25 lakh bales by 2030.