The Tamil Nadu Government has exempted fabrics from the purview of Value Added Tax while doing away with the hike it had announced on fabrics in July.

According to an official press release, the decision was taken in the Cabinet meeting today. The order providing for VAT exemption while doing away with the 5 per cent VAT levied on July 12, covers a range of fabrics and related products covered under Schedule IV, section 3-10 of the VAT Act 2006.

The list which includes woven fabrics of silk, silk waste, carded wool, cotton, synthetic filament yarn, artificial filament yarn, synthetic staple fibre, artificial staple fibre, woven pile fabrics and chenille fabrics of wool, cotton or man made fibres, terry towelling and related products, also covers a wide variety of fabrics with industrial applications.

The move follows representation from the textile sector to roll back the 5 per cent VAT levied on fabrics from July 12. The industry has been impacted the sluggish demand in the international markets which has affected exports and resulted in stocks piling up. The levy of VAT earlier this month hit the competitiveness of the industry as compared with its counterparts in other States