Hyderabad: When AP is facing a serious financial crunch of the order of Rs 700 crore, it is also liberal in granting “exemptions” to Ferro all-oys and textile industries.
On Monday, the state Cabinet that met in Vijayawada gave its nod for exemptions in the name of incentives to industries.
There are as many as 150 Ferro alloy industries in the state. Since the inception of these industries, the tax the state earned from these industries total about Rs 1,000 crore while tax exemptions given to them is 10 times high — Rs 10,000 crore.
In due course, all the Ferro alloy industries in the state were closed down. They requested the state to give them more exemptions if they should survive. The state constituted a Cabinet sub-committee to study the matter, and it was headed by finance minister Yanamala Ramakrishnudu.
The main demand of Ferro alloy industries was to reduce the power charges for their units. They said the energy department is charging Rs 4.80 per unit from some industries while Ferro alloy units have to pay Rs 5.30 per unit. The power consumption was more to their units compared to other industries, they said, and requested the government to supply them power at Rs 2.16 per unit.
Energy department officials told the sub-committee that if the demand of Ferro alloys industries was accepted, the government would lose about Rs 656 crore of revenue a year.
In its report, the Cabinet sub-committee did not ma-ke any recommendations to the government and submitted only the factual position. Based on this, the government decided to supply power to these units on subsidised rates.
At the same time, the state government decided to request the Centre for grant of exemption of central excise duty to Ferro alloys industries. The state government will also give exemption of VAT etc to these industries.
Meanwhile, textile units have also requested the state government for VAT exemptions by way of granting an extension of the old textiles policy. Officials said the exemptions requested by the textile industries will cost the state exchequer about Rs 80 crore.
