Textile mills in Tamil Nadu want the hiked VAT on petrol and diesel to be withdrawn. VAT has been increased on diesel from 21.43 per cent to 25 per cent, which has pushed up its price by Rs 1.76 a liter; and on petrol from 27 per cent to 34 per cent, which has pushed up its price by Rs 3.77 a liter.

Mills say the hike is unwarranted since GST is likely any time soon. They feel this would impact the textile industry. The present hike in VAT would have a considerable impact on the transport cost of all items as textile clusters of different value segments are located in different places and with the mill sector using diesel generators to tide over load shedding and tripping it could increase the power cost as well.

The textile industry in Tamil Nadu feels while other states enjoy huge incentives it is already in a disadvantageous position as the spinning sector spends around Rs 6 per kg to procure the raw material from upcountry markets and another Rs 4 per kg to sell the yarn in those markets. Tamil Nadu has some 2,000 textile mills, which are predominantly spinning-oriented.