ºÝºÝߣ

ºÝºÝߣShare a Scribd company logo

Industrial policy letter

•Download as DOCX, PDF•
•
S
Siri Sireesha

- The document is a letter from the Andhra Pradesh Spinning Mills Association to the Honorable Minister for Urban Development regarding issues facing the spinning industry in Andhra Pradesh after the state's bifurcation. - The key issues discussed are the lack of sufficient local cotton production, leading to higher costs from importing cotton from Telangana; the need to reduce VAT on cotton from 5% to 2% to alleviate the burden of delays in VAT refunds; and the need for power subsidies and bank interest subsidies to help mills compete given their high machinery and production costs. The letter requests the minister's assistance in addressing these issues to help the struggling industry survive.

1 of 3
Download to read offline
ANDHRA PRADESH SPINNING MILLS ASSOCIATION (Regd. No. 39201) 1st Floor, Sai Plaza, Above Bank of India, Lakshmipuram, Guntur – 522 007, Tel: +91-863 – 2244146, PH: 9030475859, Email: contact @ apspin.com, DATE: 15-08-2014 To Sri.M.Venkayya Nayudu Garu, Hon'ble Minister for Urban Development, Government of India, NEW DELHI. Respected sir, Sub : new industrial policy and issues. *** Spinning is one of the major Industries in Andhra Pradesh and it is the backbone to the whole Textile Chain. It provides employment to hundreds of thousands directly or indirectly. Today after state bifurcation the Industry in the residual Andhra Pradesh is struggling due to the following problems. It is essential to provide the following and help the Industry and the people associated with it. Raw Material issue due to State Bifurcation: In the United Andhra Pradesh the total no of cotton bales produced per year is around 76 lakh bales and in Residual Andhra Pradesh the total production per year is around 27 lakh bales but the residual AP has got 40 lakh spindles and requires more cotton lint than what we produce and need to purchase from Telangana state only against CST which increased the cost of cotton lint in AP mills. Whereas Telangana mills (with 10 lakh
spindles) getting the same cotton lint at lower cost and due to this spinning mills in AP are facing heavy competition and difficult to survive. Hence, we request the AP State government to ask the Govt of India for the exemption made for levy of CST at one per cent for Cotton. (This is given to Uttarakhand state by Central government). VAT Reduction to 2% from 5%: Most of the Spinning mills in AP export their products to other countries and domestic sales are very less. Since the VAT is exempted on the exports, major amount of the VAT is refundable. As it takes about 18 to 20 months to get the VAT refund it is essential to reduce the VAT to 2% on cotton. It is an additional burden on the Industry to pay the interest to bankers on the money held up with VAT department for long periods. Power Subsidy Rs 3 per unit. Subsidy needs to be adjusted in the bill rather than reimbursement: According to the Andhra Pradesh Industrial policy 2005 – 2010, the power cost for the textile sector was Rs. 2.60 per unit after the subsidy for 5 years from the date of commencement of the Commercial production. Further in 2010 – 2015 policy it was extended by another 3 years, making the total period of 8 years. More than half of the mills in AP have started their production after 2010 and could not avail the subsidy. So we are paying the cost of 5.36 per unit and have the subsidy for only Rs. 0.75 per unit (reimbursement is pending from several years). We are unable to compete with other states as the power cost makes huge impact in the cost of production and the industry is struggling to survive. Bank Interest Rate Subsidy of 7%: In the whole Textile Industry, the spinning industry has a lot of machinery which carries the conversion cost to very high level. Ultimately the project
cost is very high when compared with Ginning & Weaving units. The bank interest amount makes a huge impact in the cost of production Thanking you, With Warm Regards. PARUCHURI DHARMA TEJA, CHAIRMAN. +91-8978799699. mailid: director@sakkugroup.com.

More Related Content

Industrial policy letter

  • 1. ANDHRA PRADESH SPINNING MILLS ASSOCIATION (Regd. No. 39201) 1st Floor, Sai Plaza, Above Bank of India, Lakshmipuram, Guntur – 522 007, Tel: +91-863 – 2244146, PH: 9030475859, Email: contact @ apspin.com, DATE: 15-08-2014 To Sri.M.Venkayya Nayudu Garu, Hon'ble Minister for Urban Development, Government of India, NEW DELHI. Respected sir, Sub : new industrial policy and issues. *** Spinning is one of the major Industries in Andhra Pradesh and it is the backbone to the whole Textile Chain. It provides employment to hundreds of thousands directly or indirectly. Today after state bifurcation the Industry in the residual Andhra Pradesh is struggling due to the following problems. It is essential to provide the following and help the Industry and the people associated with it. Raw Material issue due to State Bifurcation: In the United Andhra Pradesh the total no of cotton bales produced per year is around 76 lakh bales and in Residual Andhra Pradesh the total production per year is around 27 lakh bales but the residual AP has got 40 lakh spindles and requires more cotton lint than what we produce and need to purchase from Telangana state only against CST which increased the cost of cotton lint in AP mills. Whereas Telangana mills (with 10 lakh
  • 2. spindles) getting the same cotton lint at lower cost and due to this spinning mills in AP are facing heavy competition and difficult to survive. Hence, we request the AP State government to ask the Govt of India for the exemption made for levy of CST at one per cent for Cotton. (This is given to Uttarakhand state by Central government). VAT Reduction to 2% from 5%: Most of the Spinning mills in AP export their products to other countries and domestic sales are very less. Since the VAT is exempted on the exports, major amount of the VAT is refundable. As it takes about 18 to 20 months to get the VAT refund it is essential to reduce the VAT to 2% on cotton. It is an additional burden on the Industry to pay the interest to bankers on the money held up with VAT department for long periods. Power Subsidy Rs 3 per unit. Subsidy needs to be adjusted in the bill rather than reimbursement: According to the Andhra Pradesh Industrial policy 2005 – 2010, the power cost for the textile sector was Rs. 2.60 per unit after the subsidy for 5 years from the date of commencement of the Commercial production. Further in 2010 – 2015 policy it was extended by another 3 years, making the total period of 8 years. More than half of the mills in AP have started their production after 2010 and could not avail the subsidy. So we are paying the cost of 5.36 per unit and have the subsidy for only Rs. 0.75 per unit (reimbursement is pending from several years). We are unable to compete with other states as the power cost makes huge impact in the cost of production and the industry is struggling to survive. Bank Interest Rate Subsidy of 7%: In the whole Textile Industry, the spinning industry has a lot of machinery which carries the conversion cost to very high level. Ultimately the project
  • 3. cost is very high when compared with Ginning & Weaving units. The bank interest amount makes a huge impact in the cost of production Thanking you, With Warm Regards. PARUCHURI DHARMA TEJA, CHAIRMAN. +91-8978799699. mailid: director@sakkugroup.com.