The Hindu : Tax on Captive Power: Decision unlikely before June

Online edition of India's National Newspaper
Wednesday, Dec 03, 2003

Southern States

Southern States - Karnataka

Tax on Captive Power: Decision unlikely before June

By Our Special Correspondent

BANGALORE Dec. 2. The Government prefers to wait till June next to discuss the demand of the industry for abolition of the 50 paise per unit tax on power generated by captive units.

The Chief Minister, S.M. Krishna, reportedly indicated this during an interaction with representatives of industry here today.

Mr. Krishna reportedly told the meeting that the plea for abolition of five per cent tax on the total electricity bill could be discussed depending upon the monsoon situation.

The meeting was attended by representatives of the Federation of Karnataka Chambers of Commerce & Industry (FKCCI), Greater Mysore Chamber of Industry, and Confederation of Indian Industry.

In a memorandum, the FKCCI president, B.S. Arun Kumar, pointed out that industries in the State had set up captive power plants to meet part of their loads not of their own volition but due to a rule which was in force at that time.

Huge investments were made in captive power plants and a massive capacity of 3000 MW was created.

By harnessing power from captive units, industry had helped the State indirectly during an adverse power situation by reducing the burden on the grid. Industry was justified in expressing anguish at the imposition of a huge electricity tax, which would render industrials units in the State uncompetitive.

The Confederation of Indian Industry requested the Government not to burden industry with the tax on captive power generation.

While the CII, Karnataka, understood the circumstances under which the Government levied the tax, it felt it should not be implemented now when industry had to grow at least at 10 to 12 per cent to achieve the target of 8-9 per cent growth set by the State for the 10th Plan period.

Industries were struggling over the past few years due to market competition and rising costs of inputs, mainly the cost of power.

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