No decision on sops for small weavers

The contentious issue of restoring excise duty exemptions to small weavers and powerloom units remains unresolved, with both the finance and textiles ministries seeking more time to examine the issue before firming up a decision.

Textiles Minister Shankersinh Vaghela yesterday met Finance Minister P Chidambaram to discuss the Cenvat issue. "We will need more time to examine the issue. We have been asked to come out with our Budget suggestions. There will be another round of meeting (with the finance minister)," Vaghela told Business Standard after the meeting.

Official sources said a second meeting was likely next week. While both the ministers agree that further procedural simplification of the Cenvat is necessary, the issue of restoring exemptions to a select few in the textile chain without disturbing the Cenvat chain has become a more difficult exercise.

Certain allies of the United Progressive Alliance government have sought the restoration of excise exemption in their manifestos.

The officials point out that any restoration of excise exemptions will cause fragmentation of the sector and encourage tax evasion.