Cotton ginning units of MP denied tax sops

The chances of reviving sick and dying cotton ginning and pressing units in the Nimar region have dimmed because the MP government has refused to extend the entry tax exemption facility that has been given to all cotton mills in the recent state budget.

Also, there is a stiff competition from the neighbouring states. The production of cotton this year has dwindled from 183,450 tonnes in 2006-07 to 163,681 tonnes (till January), and the season is almost over now.

In his budget speech, MP Finance Minister Raghavji had abrogated entry tax for cotton mills and cotton procured for the purpose of manufacturing all type of fiber. But the commercial tax department has said that the facility will not be available for the ginning and pressing industry.

"We have been asked to pay an entry tax of one percent. We are confused since the state government has already exempted cotton mills from entry tax. If the tax stays, we will be in more trouble since the ginning industry is facing intense competition from the neighbouring mills of Maharashtra," said Gopal Tayal, secretary of Sendhwa Cotton Association.

Most of the state cotton and ginning units are in the west Nimar region and located in Sendhwa, a town in the Barwani district, which shares its borders with Maharashtra. A number of mills have migrated to Chalisgaon and Aurangabad. Last year, the Sendhwa millers had raised the issue of mandi tax, which has since been lowered from 2 to 1 per cent.

Speaking to Business Standard, GP Singhal, principal secretary, commercial tax department said, "We have no other source of income. The entry tax is levied in lieu of octroi. Further, the millers gin and press for other states. This facility (entry tax exemption) is only available for cotton mills of the state.

However, we may consider extending some relief to them at a later stage under certain conditions."

With a combined turnover of Rs 800-1000 crore, the arrival of cotton in the Sendhwa mandi touched 1.8 million bales this year. "Frequent power cuts, higher tariff, law and order problems, non-availability of cotton have aggravated our problem," Tayal said.

Mandis of Sendhwa, Khandwa, Kukshi, Dhar, Dhamnod, Manawar, Khetia, Pansemal and Ajand have also reported a low arrival of cotton this year.