Exemption limit for SSI electricity duty to be raised

The Orissa government is mulling to raise the exemption limit for the payment of electricity duty for small scale industries (SSIs) to 25 mw from 5 Mw stipulated in the Industrial Policy Resolution (IPR), 2007.

It is proposed to be made a part of the micro, small and Medium Enterprise (MSMEs) Development policy being finalised by the state government.

The directorate of industries (DI) has already sent a proposal to the government in this regard. This will be put before the state cabinet for approval and the provision will be made a part of the proposed MSME Development policy after the cabinet’s nod, sources said.

“We have sent a proposal to the government for raising the exemption limit for the payment of electricity duty and the cabinet will take a final decision on this”, Hemanta Sharma, director industries, Orissa government told Business Standard.

As per the provisions of the IPR, 2007, new industrial units in the thrust sector are entitled to 100percent exemption of electricity duty up to a contract demand of 5 mw for a period of 5 years from the date of availing power supply for commercial production. This is proposed to be raised to a contract demand of up to 25 mw for all units in the small scale industries (SSI) sector.

Sources said, the latest move of the government follows the demand from various small and medium industry associations in the state to raise the limit for exemption for electricity duty. Once implemented, this move is likely to benefit more than 1000 small and medium units operating in various sectors of the state.

However, the state government is yet to accede to the industry associations demand for implementing the seasonal tariff system for seasonal industries like sugar, salt, rice mils, food processing. Though states like Punjab have provided this concession to seasonal industries like fruit juice units there, the Orissa government is yet to take a decision.

The advantage with the implementation of seasonal tariff instead of base tariff for the year as a whole is that units operating for few months in a year, will be required to pay for the consumption tariff for few months instead of paying the base tariff for the year as a whole.

“Payments of fixed charges for the contract load by a unit, when the production is insignificant or nil, adds to the burden of the entrepreneur. So the base tariff system for seasonal industries should be waived”, Niranjan Mohanty, president, Utkal Chamber of Commerce and Industry (UCCI) said.

On this demand by the industries, Sharma said, the demand has not been accepted as it is subject to regulation of Orissa Electricity Regulatory Commission (OERC). It may be noted the draft MSME policy has been finalised taking feedback from all the stakeholders and it is likely to be placed in the next meeting of the state cabinet for approval, sources added.