NAVEENA GHANATE
Hyderabad
The Federation of Telangana Chambers of Commerce and Industry (FTCCI) wants the TS Government to look into some of the problems MSMEs.
Skyrocketing land prices are making it impossible for MSMEs to set up industrial units. The industrial units in the state are facing the problems of high power costs, delay in getting no dues certificates to buy power from open access, additional surcharge, wheeling charges, hurdles in solar projects, and high property tax on industrial units etc.
There are some pain points like the trade license fee, industrial property tax, cost of energy, disbursement of incentives etc. which MSMEs are facing in the state, said Anil Agarwal, the President of FTCCI while interacting with the media at its office in Red Hills on Friday.
Elaborating on the Trade License Fee he said, “The Trade License Fee collected by Municipal Corporations is nothing but double taxation. Both the trade license for establishments and property tax is calculated on the basis of area. The FTCCI had raised the issue with competent authorities several times but the problem has not been addressed yet.”
The highest trade license fee collected in the past used to be Rs 7,000 but now some units are forced to pay even a lakh. After 2020 as per GO No: 147 of the MA & UD department dated September 22, 2020, the Trade License Fee is collected on the basis of the area (on a sq. ft. basis).
According to this, industrial establishments must pay a minimum license fee of between Rs 4 per sq. ft. to Rs 7 per sq. ft. for built-up area including manufacturing blocks/QC buildings/sheds/administrative blocks etc. as per the size of the unit whether micro, small, medium or large.
Traders and business establishments are charged Rs 3 to 5 per sq. ft. depending on the width of the road facing the establishment, that is, 30 ft, 40 ft or more than 40 ft.
“GO: 147 was issued in September 2020 but due to Covid-19 it was not implemented. But now we are receiving notices for payment and to the astonishment of all the amounts are substantially high.
For instance, a trading unit which was earlier paying Rs 7,000 is now forced to pay lakhs. The FTCCI requests the government to scrap GO No: 147 issued in September 2020 and go back to the old system” Anil said.
Many states in India don’t levy trade licences on industrial establishments. Even if some states charge, they charge only nominally.
Speaking about the cost of power, Anil Agarwal said, “The power tariffs levied on industries in Telangana is one of the highest in the country. Industrial units used to buy cheap power from power exchanges through open access from the open market. The concept is to allow customers to choose from a number of competitive power companies rather than being forced to buy power from the local utility monopoly.”
He said that allowing companies to choose not only helps industrial commercial consumers by ensuring regular electricity supply at competitive rates but also enhances the business of power markets.
“But since 2015, NOCs (No Objection Certificates) have not been issued to new units. In the case of those to whom NOCs were issued additional surcharges imposed on the purchase of power through open access is Rs 1.38 paise per unit. An additional surcharge was introduced as a temporary measure to allow the recovery of stranded power costs of DISCOMs. The additional surcharge is discouraging industrial units from procuring power through open access,” he said.
The Proposed Additional Surcharge during H1 of FY 2022-23 was Rs 4.06/KWH while the Approved Additional Surcharge is Rs 1.15/KWH. The Proposed Additional Surcharge H2 during FY 2022-23 is Rs 6.81/KWH while the approved additional surcharge is Rs 1.38/KWH. The proposed additional surcharge during H1 of 2023-24 was Rs 9.86/KWH.
Speaking about wheeling charges Anil said, “Another big difficulty faced by Open Access power consumers in Telangana is wheeling charges and it is collected upfront. All other states are charging on unit basis. Due to this industrial units are unable to avail open access power to get power at an affordable price and reduce operational costs thereby increasing the financial burden on units.”
Net metering of solar power on the same premises is allowed up to only one MW. “To promote renewable energy and to reduce the cost of doing business we request the government to allow net metering up to 5 MW. We request the government to allow wheeling of solar power for captive use or for third-party sale to encourage solar power,” Anil said.
He added that the increase in industrial property tax is also very high in panchayats and the cost of running industrial units is becoming prohibitively high, particularly for MSMEs.
Anil said that industrial incentives have not been paid since 2015. “Incentives of Rs 3,000 crore remain unpaid. Although sufficient budget allocations have been provided in budgets year after year they are not disbursed. Even in the latest budget nearly Rs 3000 crore has been allocated for the same.”
On land costs, Anil said, “The cost of land is skyrocketing. Lands are not affordable even in the clusters set up by the government. The cost of land has gone up so high that it has become very challenging for MSMEs.”
