The Central Sales Tax (CST) in Tamil Nadu is two per cent, while the VAT is five per cent. This taxation structure has rendered the sourcing of yarn by the weaving and apparel manufacturing units in the state from outside the state more profitable. Though this problem would be sorted out with the introduction of Goods and Services Tax, the competitiveness of the mills in the State would be affected till then, according to T Rajkumar, Chairman, Southern India Mills’ Association (SIMA). Looking at controlling the damage in the interim period, SIMA has written to the State Government. The Chairman stressed the importance of developing a new textile policy for the State in order to sustain, improve competitiveness of the existing units and attract new investments.
