The Government on Thursday announced its decision to abolish the Textile Committee Cess on readymade garments. The abolition of the cess has been a long-standing demand of the industry.

"The exemption of readymade garments from Textile Committee Cess will rationalise cess and tax burden on readymade garments and improve their competitiveness in global markets," the Information and Broadcasting Minister, Mr Priyaranjan Dasmunsi, said after a meeting of the Union Cabinet.

The cess, which comes to 0.05 per cent of the production value of textile industry, is meant for funding the activities of Textile Committee. The Committee was set up by an Act of Parliament to ensure quality of textiles and textile machinery.

The industry, however, has been claiming that the cess has outlived its utility since the collections were far higher than what is required to sustain the Committee's activities.

The collections from the cess come to Rs 42 crore in a year and readymade garments account for half of it, according to industry sources.

While welcoming the abolition of cess on readymade garments, the Confederation of Indian Textile Industry said it would have been better if the entire industry were to be exempted from it.