CII seeks review of levying infra development fee

The Punjab government should review its decision to levy infrastructure development (ID) fee on power and fuel as the move will "hamper" the prospects of attracting new industrial investments in the state, according to industry body CII.
Besides, the fee will also make the existing industry uncompetitive in the state as its input cost will go up considerably, the Confederation of Indian Industry said.
"This fee and cess has indeed taken the whole of Punjab industry by surprise. As energy costs happens to be a major component of any trade and manufacturing activity, this state government's decision will certainly impact the overall competitiveness of Industry based in Punjab.

"In addition, it would also hamper Punjab's plans to attract new investments in state," said D L Sharma, Convenor, CII Punjab Public Policy & Advocacy Panel & Director, Vardhman Textiles Limited.
The state government has already announced to hold investment summit in October to attract new investments into the state.
Punjab Cabinet had decided to levy ID fee on fuel, electricity and immovable properties on May 20 as part of its efforts to mop up additional revenue of Rs 1,400 crore annually.

S S Bhogal, Chairman, CII Punjab State Council & Managing Partner of Ludhiana based Bhogal Sales Corporation, said, "The intent of the state government to upgrade state's infrastructure is certainly good, however this decision of 5 per cent Infrastructure development (ID) fee on power tariff coupled with existing 13 per cent duty on Power and Rs 1 cess on Petrol & Diesel will slow down energy intensive industry in the state and make the Punjab Industry in competitive viz a viz neighbouring states".

The CII in its statement also appealed to the state government to have a relook at it's policy of cross subsidising the power being supplied to farm sector.
The CII suggested the state Government to consider rationalising power supply to the agriculture sector whereby it can allot a particular number of free units of power to farmers based on the crop need he is cultivating.
"If the farmer is able to irrigate the fields within his fixed quota, he should be able to redeem the balance units for cash, whereas if the farmer overshoots his quota, then he should be charged for the number of exceeded units he has consumed", said a CII release.

The CII experts said the current policy of cross subsiding the farm sector at the expense of other key sectors including industry and trade is "not economically sustainable" and therefore the state is facing a huge fiscal and revenue deficit, which is having an overbearing impact on socio economic growth of the state.