The Gujarat government had imposed 5% VAT on narrow fabrics during the State Budget in February-2015 which is manufactured mainly in two big centres, Surat man-made fabric (MMF) hub and Ahmedabad. In Surat alone, there are aound 300 small and bigh manufacturers of narrow fabrics. Following representation made by the industry association on Monday, the Gujarat government likely to abolish the 5% value-added tax (VAT) on narrow fabrics manufactured in Gujarat.

The decision was conveyed to the industry association led by South Gujarat Textile Processors Association (SGTPA) president Jitu Vakharia during a meeting with Minister of State for Finance, Saurabh Patel at Gandhinagar on Monday.

Vakharia said that narrow fabrics in other states do not attract any sort of VAT. The VAT was applicable to the fabrics manufactured in Gujarat. There was a growing concern that the manufacturers in Gujarat will lose their business due to the five percent tax. They had made representation to the state government to abolish the tax.

Narrow fabrics is being used in apparel industries, orthopedical industries, electronic industries, car industries to name a few. Some of the applications of narrow fabrics are elastic tapes for gents and ladies undergarments, shoe elastic, saddlery tapes, sling tape or webbing, tapes for luggage industries and bandage tape.

As per an estimate, around Rs 150 crore worth of narrow fabrics is supplied to various garment manufacturing hubs across the country per annum.