Power tariff hike to spur SMEs flight from UP

The proposed hike in industrial power tarrifs in Uttar Pradesh would spur migration of Small and Medium Enterprises (SMEs) to the neighbouring state of Uttarakhand, Indian Industries Association (IIA) has said.

According to IIA, the proposed hike was ostensibly merely 7-10%, however in effect it would result in 25-30% increase in power tariffs for industry.

“The proposed hike would impair our cost competitiveness and we would be forced to relocate to other states offering us cheaper power,” IIA Lucknow chapter president Man Mohan Agarwal told Business Standard here.

He maintained if the proposed power tariffs were executed, it would result in migration of almost 25% SMEs, mostly to Uttarakhand. Besides, IIA has reiterated the demand for converting leasehold industrial plots into freehold.

Recently, the state government had allowed such conversion for UP State Industrial Development Corporation (UPSIDC) plots, which had been on lease for 30 or more years. However, industry wants freehold conversion to all plots irrespective of the 30 year barrier.

“Most plots were given on lease less than 30 years back. As such, the decision of the government has yet not benefited the majority of industrial units,” he lamented.

He said the government was losing on one-time freehold charges revenues to the tune of almost Rs 600 crore with its 30 year stipulation. Industrial plots are generally given on 90 year lease to industries. Apart from UPSIDC, District Industries Centres (DIC) also give industrial plots on lease. If the state government allows conversion of leasehold to freehold, an estimated area of 10 sq km in Lucknow alone would benefit.

Further, IIA has demanded the government to relax the duration of registering lease deed from 6 months to 2 years. Presently, the entrepreneur has to register lease deed within 6 months of allotment else the prevalent circle rate is considered for registration, which doubles the stamp duty.

Besides, IIA wants adequate police security for industrial enclaves, as the incidents of looting of entrepreneurs had become routine. Meanwhile, IIA is planning to organise its annual conclave in October 2014.