MAJOR RESEARCH PROJECT

SYNOPSIS
TITLED
The impact of subsidy given by Central & State government to cotton ginning & pressing
units in India.
A Research synopsis submitted as partial fulfillment for the award of Degree of Master of
Business Administration MBA (Full Time)
Batch(2012-2014)

Submitted by: Guided by:
Anshul Mittal Dr. C. K. Goyal
MBA III SEM

Dept. IBMR,IPS ACADEMY
Rajendra Nagar, AB ROAD Indore-452012(MP)
Affiliated to Devi Ahilya Vishwavidyalaya, indore






INDEX

Sr.no


1

Topic



2

Introduction
a) Back ground Research
b) Detail of the company

3

Literature review



4

Rationale of study



5

Objective of study



6

Research Methodology



7

Biblography/ Webilography










Topic of research


THE IMPACT OF TAX SUBSIDY GIVEN BY CENTRAL & STATE GOVERNMENT
TO COTTON GINNING & PRESSING UNITS IN INDIA.

















INTRODUTION

Back ground of Research Area
Subsidy
A subsidy is a form of financial or in kind support extended to an economic sector (or institution, business, or
individual) generally with the aim of promoting economic and social policy. Although commonly extended
from Government, the term subsidy can relate to any type of support - for example from NGOs or implicit
subsidies. Subsidies come in various forms including: direct (cash grants, interest-free loans), indirect (tax
breaks, insurance, low-interest loans, depreciation write-offs, rent rebates). Furthermore, they can be broad or
narrow, legal or illegal, ethical or unethical. The most common forms of subsidies are those to the producer or
the consumer. Producer/Production subsidies ensure producers are better off by supplying market price
support, direct support, or payments to factors of production. Consumer/Consumption subsidies commonly
reduce the price of goods and services to the consumer.
Tax subsidy
Government can create exactly the same outcome through selective tax breaks as through cash
payment. For example, suppose a government sends monetary assistance that reimburses 15% of
all health expenditures to a group that is paying 15% income tax. Exactly the same subsidy is
achieved by giving a health tax deduction. Tax subsidies are also known as tax expenditure. Tax
subsidies are one of the main explanations for why the tax code is so complicated.
Tax subsidies are the result of selective tax legislation that benefits particular groups of people or industries in
the economy. In effect, they share the costs of certain actions between the private sector and the government
and impact investment decisions by increasing the expected returns associated with a particular pattern of
economic activity. Tax subsidies may be applied in a number of ways to any one or a combination of
economic variables (land, labor, capital).
The stated goal of tax subsidies, according to the U.S. General Accounting Office, is to promote
some policy objective such as "economic growth or a desirable expenditure pattern by
taxpayers." However, there is a great deal of disagreement over whether particular tax benefits
typically encourage "socially desirable" economic behavior. Further, even if the policies are
effective, they are static and may become ineffective or counterproductive as circumstances (be
they demographic, technological, or economic) change.


How Tax Subsidies Work
Tax subsidies increase expected returns by decreasing the costs associated with taxation. This is
accomplished in four main ways: providing tax credits; altering the statutory tax rate; altering the
taxable basis (i.e., the activities and expenses which are or are not included in the calculation of the
tax base); and altering the taxable entity (such as by allowing losses from one corporation to off-
set profits of another). Each of these methods of subsidizing private activity via the tax code has
additional variants as well, which are described in more detail below.

Details of industry
Cotton ginning & pressing factory is one of the oldest business in the world. In ancient time people
use to gin the cotton by their hands to prepare the yarn. But now a days there are big unit involve
in ginning and pressing the raw cotton. They produce number of cotton bales and these bales are
supplied to many yarn mills in India as well as outside of India.
In previous year 2013-2014 number of cotton bales produced in India 3.25 cr.
Out of which 1.5 cr. bales are exported to other countries like china, Pakistan, Indonesia
We can say that these industry plays and important part in total export of the country.
Main products produce by industry
Cotton bales: - It is first and most important product of this industry. It is prepared after proper
ginning & pressing of raw cotton. It is the raw product for yarn industry.
Cotton seeds: - Cotton seeds are comes when ginning process is done. It is used as cattle food and
it is also supplied to oil mills to extract oil from these seed.
Cotton seed cake: - It is by product when oil is extracted from seeds. It also used as cattle food.





Review of literature
Cotton Corporation of India(CCI)
The Govt. of India launched Technology Mission on Cotton in February 2010.
TMC had four Mini Missions as under
Mini Mission I: Cotton Research & Technology Generation
Mini Mission II: Transfer of Technology & Development
Mini Mission III: Development of Market Infrastructure
Mini Mission IV: Modernization / Setting up of new G&P factories.
For MM-IV Ministry of Textiles was the nodal agency and The Cotton Corporation of
India Ltd. (CCI) was the implementing agency.
Under Mini Mission-IV, there was a target of modernization of 1000 G&P units. Against the said
target, 1011 G&P units were sanctioned, however, only 859 G&P units reported completion of
their projects. GOI subsidy of Rs.184.75 crores was released to these beneficiaries. Thus, 85.9% of
the laid down target was achieved. The state-wise details of G&P units sanctioned for
modernization / completed their projects are as under:
STATE-WISE NUMBER OF G&P UNITS SANCTIONED/COMPLETED AND PAID FOR
MODERNIZATION UNDER TMC MINI MISSION- IV DURING 9TH, 10TH & 11TH
PLANS
Rupees in crore
State
G & P Factories
Sanctioned Projects Completed Projects GOI Share Released
Diu (U.T.) 1 1 0.27
Punjab 19 11 2.18
Haryana 7 5 1.32
Rajasthan 2 0 0.00
Madhya Pradesh 53 46 9.69
Gujarat 557 506 106.97
Andhra Pradesh 34 22 4.99
Karnataka 15 13 2.66
Tamil Nadu 2 1 0.31
Orissa 8 6 1.21
Maharashtra 313 248 55.15
Total 1011 859 184.74
The Economic Times, keyur dhandeo, Sep 5 2012
AHMEDABAD: Gujarat government on Wednesday announced new textile policy for next five
years. It expects an investment of Rs 20,000 crore over five years, 25 lakh new jobs, of which 50%
will be for rural women. It focuses on 4Fs (farm, fibre, fabric, foreign). It focuses on value addition of
cotton within the state. At present 90% of state's cotton is sold in other states. Gujarat produces close
to 30% of country's cotton.
1. Envisages doubling of spinning capacity 25 lakh spindles to 50 lakh spindles in five years,
encourage cotton spinning and weaving in cotton producing areas of the state

2. Interest subsidy of 5% for technology upgradation for ginning, spinning weaving processing and
ready made garments and 7% subsidy for purchase of plant and machinery
3. Exemption on VAT on produce
4. Relief of Rs 1 per unit on power tariff for spinning and weaving for five years, assured lignite
for captive power plant
5. Assistance of 50% or upto Rs 50,000 for Audit of energy, Environment, Water conservation.
6. Relief of 20% or Rs 20 lakh on plant machinery for audit.

K. R. Mandovra (advocate & legal advisor)
Technology Mission on Cotton (Mini Mission III & IV)
Under MM-III 60% of the cost of development is borne by the Government of India and
the balance by the Agricultural Produce Marketing Committee (APMC) / State
Government concerned. GOI assistance is limited to Rs. 1.50 crores for setting up of new
yards and Rs. 0.90 crores for improvement of existing market yards.
Under MM-IV, capital incentive @ 25% of the total cost of modernization / upgradation of Ginning
and Pressing factory with a ceiling of Rs. 20 lakh per unit is borne by the GOI and the rest by
the entrepreneur. Further, for installation of new bale press and HVI/MVI laboratories,
additional incentive of Rs 7 lakh and Rs. 4 lakh respectively has also been allowed.



Rationale of study

The outcome of study will be to now the impact on the production capacity of cotton ginning &
pressing units after giving subsidies to this industry by government.
The study is conducted to know number of ginning & pressing units increased after subsidy is
given by government.





Objective of study

1. To study the tax subsidy given by government to cotton industries.
2.To understand the effect of the subsidy on production capacity.
3.To understand increment in the number of new units of cotton ginning & pressing.









Research methodology

Method of reseaech is Descriptive.


Sample size
Total sample size 50
30 from Madhya Pradesh & 20 from Maharashtra

Tools for data collection
1. Primary data through personal meetings.
2. Secondary data through online.










Bibliography

Books:
Subsidies in India (2006) New century publication by Rishi Muni Dwivedi
Research method and techniques (2007) wishwaprakashan New Delhi by C.P. Kothari
Paying for it 2009 revised edition published by Harvard crimson



Webliography
Links:
1. www.earthtrack.net
2. www.wikipedia.org
3. www.business_satandard.com
4. www.economictimes.com
5. www.treasury.gov
6. www.google.com










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