Industrialists Seek Relief from Rising Electricity Duty and Transportation Costs
In a bid to halt the alarming migration of industries from Himachal Pradesh, the state government is considering a significant reduction in electricity tariffs. The move comes in response to a surge in discontent among industrialists, primarily centered around the recent spike in electricity duty from 11 to 19 percent in September. The government is now proposing to slash this duty to 13 percent, aiming to make the state more competitive in comparison to neighbouring regions.
The impetus for this proposed reduction lies in the perception that other states such as Jammu and Kashmir, Punjab, Haryana, and Uttar Pradesh are offering more favourable concessions to industries, particularly in terms of electricity duty and GST returns. External industries are increasingly drawn to these states, posing a threat to Himachal’s economic landscape. The government hopes that by lowering electricity duty, industrialists will be dissuaded from relocating to other states.
The industrial hub of Baddi-Barotiwala-Nalagarh (BBN) has been particularly vocal about its dissatisfaction with the recent electricity duty hike. Additionally, concerns have been raised about the high transportation costs within the state and reported interference from unions. Himachal-based industries often find themselves importing raw materials from other states, and the finished goods they produce are primarily consumed outside the state. This has led to a significant increase in freight charges, making the transportation of finished goods 30 to 50 percent more expensive.
The impact of increased electricity rates and duty has resulted in a surge of Rs 1.10 per unit in the prices, coupled with the imposition of taxes on running generators during power cuts. As a consequence, the current electricity prices for industries in Himachal have become comparable to those in Punjab, Haryana, and Uttarakhand. Surprisingly, industries in Chandigarh and Jammu and Kashmir enjoy lower electricity costs from Himachal.
Industries in Himachal currently pay six and a half to seven rupees per unit, whereas Jammu and Kashmir offer electricity at four and a half rupees, Uttarakhand at six rupees, and Punjab at six and a half to seven rupees per unit. To exacerbate matters, industries in Himachal also bear the burden of Additional Goods Tax (AGT) and Certain Goods Carried by Road (CGCR) tax, further increasing the cost of production.
Faced with the looming threat of industrial migration, the Industries Minister, Harshvardhan Chauhan, has personally engaged with the Chief Minister to discuss potential solutions. The proposal to reduce electricity duty by 6 percent is being explored as a crucial measure to retain industries within the state. As Himachal Pradesh strives to maintain its economic foothold, the government is grappling with the delicate balance of providing concessions to industries while ensuring the state remains a competitive destination for business.
