Punjab industry opposes govt for cheap power to new entrants

Punjab government may be inviting new investments with a slew of incentives, but the existing industry has strongly opposed the move to offer power to new investors at cheaper rates, saying it will "ruin" the businesses already running in the state.
"We strongly condemn the decision of the state government to give power at cheaper rates to new investors, leaving the existing industry out of this offer," Mandi Gobindgarh based steel maker Mohinder Gupta said today.
"Already new industries are being offered several fiscal incentives and now cheaper power to them will ruin the existing industry," he further said while raising question over the commitment of new investors in putting money into the state.

In an important decision, the Punjab Cabinet yesterday announced to offer power at less than Rs 5 per unit (FCA extra) to industrial units which intend to set up their units during Invest Punjab summit or which have already installed their units to avail 'Fiscal Incentives for Industrial Promotion (revised), 2013'.
Prospective investors will be entitled to get cheaper power for five years from the start of commercial operations.
The announcement of offer of cheap power came in the wake of two-day Punjab long 'Progressive Punjab Investors Summit' which is set to commence tomorrow at Mohali as the state seeks to hard sell itself as the best investment destination.

Existing industry be it iron and steel, bicycle makers, auto parts makers contended that the viability of the old units will be adversely hit as cheap power will render them uncompetitive. Currently, existing industry is getting power at a rate more than Rs 7 per unit.

"Our viability will be finished if we are also not given the same incentive," said Ludhiana based bicycle maker Charanjit Singh Vishvkarma who is also President of United Cycle & Parts Manufacturers Association.
Industry described giving fiscal incentives like VAT retention, exemption from stamp duty, CLU, electricity duty and now cheap power to new investors as "irrational".

"Rs 2 per unit cheap power will lead to saving of Rs 1,200 per tonne production cost to new iron and steel maker. How will we be able to survive as our production cost will be more than the cost of new unit," lamented rolling mill owner Vinod Vashisht.
Notably, Punjab government is already offering fiscal incentives like 50-90 per cent VAT retention, stamp duty, property tax exemption to new industrial units under its 2013 industrial policy.