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Haryana cotton ginners seek reduction in market fee

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September 19, 2015 Cotton ginners in Haryana today expressed fear that state cotton growers will prefer selling their crop in neighbouring states of Punjab and Rajasthan because of "higher" levies on fiber in the state.

Asking Chief Minister Manohar Lal Khattar to intervene in the matter, cotton growers have sought reduction in market fee and full tax refund, saying otherwise they will not be able to get raw cotton for ginning purpose.

The ginners, under the banner of Haryana Cotton Ginners Association, said the state government has not extended the facility of charging lesser market fee and rural development fund (RDF) on cotton this season.

"Four years back, market fee and RDF on cotton was reduced from 4 per cent to 1.60 per cent to bring (it) on par with that of neighbouring states. But in this season, the levy has been kept at 4 per cent which will render us uncompetitive and thus hit our business," Mittal claimed.

He said in Punjab and Rajasthan, the market fee and RDF on cotton is 2 per cent and 1.60 per cent, respectively.

Mittal further demanded rationalisation of VAT on cotton by ensuring refund of full tax on inter-state sale of cotton.

"The state government has now issued a notification whereby ginners will not be able to claim about 2 per cent tax out of 4.20 per cent value added tax paid on cotton while selling it to other states which will further prove disadvantageous for us," he said.

Ginners claimed that out of cotton output of 20 lakh bales, only 3-4 lakh bales are consumed within Haryana while the rest are sold to other states. There is Central Sales Tax (CST) of 2 per cent on inter-state sale.

Mittal said higher levies and lesser tax refund will put a burden of Rs 200 per quintal on cotton which will discourage growers to sell their crop within Haryana.

"If a farmer gets Rs 4,300 a quintal in Haryana as against Rs 4,500 a quintal in Punjab then why will he sell crop in the state. He will go to adjoining areas of Punjab or Rajasthan where he will get more money for his crop," Mittal pointed out.

"As a result, we will not be able to get cotton for ginning," he said.

There are about 150 cotton ginning mills in Haryana with processing capacity of 50 lakh bales.

"We want Haryana CM to address our issues otherwise we will have to shut down our units," he said.

Mittal also pointed out that a provision giving 100 per cent exemption from market fee and RDF to a new ginning unit in new industrial policy will also hurt the existing ginning units.

Ginners also demanded that they should not be charged fix charges for power consumption for the whole year, saying cotton ginning sector is operational for 6-7 months.

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