Tax leaves texturizer industry in lurch

The texturizer industry, which process partially oriented yarn (POY) in to synthetic yarn in south Gujarat, has kept its expansion plan of Rs 500 crore on hold due to the four per cent of VAT levied on them. The industry fears that it may not survive with the heavy tax.

However, the tax exempted texturizer industries that are based in Daman and Silvasa will be benefited by the VAT implementation, said Dhiru Shah, president of south Gujarat Texturizer Association.

Shah said, "The production cost of each machine is more than Rs 50,000 per month in Gujarat which includes four per cent VAT and expensive electricity as compared to the union territories. There are more than 400 texturizer industries in south Gujarat." "The association has urged the state government to exempt VAT but no step has yet been taken to save the industry," said Shah.

According to Shah, "The western region consists of 95 per cent texturizer industry in the country. Out of which, 45 per cent is located in south Gujarat, which sums up to Rs 2,800 crore while 50 per cent is based in Silvasa and Daman summing up to Rs 3,000 crore."

"If VAT and addition electricity cost continues, our industry will not be in a position to survive as the cost goes high by Rs 50,000 on the output of a single machine per month," Shah added.

He said the cost of electricity in Surat and the surrounded area is almost double. "The power in Daman and Silvasa cost Rs 2.60 per unit while the same is available in Surat at Rs 4.50," Shah added.

"All the companies of south Gujarat were collectively investing Rs 500 crore to cater the demand of synthetic cloth which has shot up in the international market. Just because of VAT the expansion is on hold as of now," said Shah.

Dilip Chasmawala, president of South Gujarat Chamber of Commerce and Industry (SGCCI) said the texturizer industry here is in a dilemma.

"If VAT is not exempted, this industry will vanish," he said adding that the industry may shift to Navapur in Maharasthra on the state border if government fails to remove tax.