Textile traders opposing to the Delhi government's tax proposal for the textile industry as the uniform rate of 5% on all varieties of textiles and fabrics except khadi and handloom would hit business.

Traders also pointed out that other manufacturing hubs like Surat, Mumbai, Malegaon, Erode, Gorakhpur, Kanpur, Amritsar and Ludhiana levy no blanket VAT on textiles and fabrics.

The Textile Association (India) member J B Soma, said that traders would write to the government to junk the hike.

According to Sanjiv Mehra, president, Khan Market Traders' Association, with the raw material costing 5% more, the finished products would cost 5% more too. Buyers would look at Gurgaon and other parts of Haryana because of this and Delhi would lose its distribution character

Mehra is of the view that it’s irrational to slash tax on ready-made garments that cost over Rs 5,000 to 5%, but levy 12.5% tax on cloth that costs Rs 50.

Pramod Kumar, president, Sarojini Nagar Traders' Association, said that even a 5% hike in taxes was significant as customers would have to bear the higher tax on both the raw material and finished product.