The cabinet approved exemption of all types of textiles and textile machinery from the levy as part of efforts to make exports competitive, information and broadcasting minister P R Dasmunsi said.

"The exemption of textiles committee cess will rationalise tax and cess burden on the sector in the changed scenario of global competitiveness, thereby improving competitiveness of Indian textile sector in global markets,'''' the minister said after the cabinet meeting.

The cess was meant to fund activities of the textile committee that works for promotion of exports and research in technical and economic fields. The textile committee, based in Mumbai, has 30 regional offices, 19 of which are equipped with laboratories.

The cess of 0.05 per cent of turnover imposed on textiles and machinery collected Rs50 crore in 2005-06.

The government had exempted garments from the cess last fiscal.

In January, the government withdrew the levy on ready-made garments, but retained it for other textile items.

The country is aiming at a 16 per cent growth in textile sector in the next five years, from about 10 per cent in 2006-07, with exports touching $55 billion by 2012.