Industry hopes for relief on costs to offset power crisis

With the Tamil Nadu Budget for 2013-14 to be presented tomorrow, the biggest concern in the State appears to be the power shortage and the lack of clarity on when this is likely to be addressed.

When the present All-India Anna Dravida Munnetra Kazhagam Government took over in 2011, the Finance Minister O. Paneerselvam had said in the house that over 3,280 MW of additional capacity would be added by March 2012 and that power cut would be lifted totally by August 2012.

But since then, little has changed.

Tamil Nadu continues to reel under power shortage estimated at 4,000 MW and foreign and domestic industry representatives say that they are not optimistic of a solution to this major infrastructure gap in the near future.

Biggest expectation

A leading industrialist and exporter, who did not want to be quoted, said the manufacturing sector’s biggest expectation from the State Budget is some relief on the cost front.

Power shortage has adversely hit the competitiveness of the industry and some relief on commercial taxes and waiver of electricity tax levied on captive power generation are much anticipated.

At a pre-budget meeting, traders and industry associations had put forward similar requests relating to commercial taxes, on a range of products including edible oil, which attracts a 5 per cent tax in the State.

The power shortage could be the single largest handicap to Tamil Nadu emerging as the ‘numero uno’ State, a target that the Chief Minister J. Jayalalithaa has set and repeatedly emphasised since her present Government took charge.

Policy measures

Some of the significant developments in this direction have been the policy measures to expedite infrastructure projects.

For instance, the Tamil Nadu Infrastructure Development Act, 2012, proposal to create an infrastructure development fund and the Transparency in Tenders Act to enhance industry comfort to participate in infrastructure development.

The Infrastructure Act provides for the creation of a nodal agency for large infrastructure projects to co-ordinate Government efforts in the sector. It covers the gamut of processes in implementing infrastructure projects, including funding, design, construction, maintenance and operation of infrastructure projects, either through public sector or public-private partnerships.

The infrastructure sector is hoping the Government carries this initiative forward with a range of infrastructure projects to be indentified for implementation.

The State Government has spelt out its plans to come out with a second volume of the Vision 2023, a ten-year perspective plan to create an international quality environment in the State.

It has said it will soon outline specific plans for infrastructure development in the State and indentify infrastructure projects to be implemented.

Manufacturing sector

In the manufacturing sector, towards the end of last year, the State Government had entered into a dozen agreements with a range of industries.

These envisage investments of over Rs 21,000 crore with generation of 40,000 jobs. This has bolstered industry sentiment at a time when a global slowdown in the manufacturing sector has the sector worried.

The proposed investments covered electronic products, auto sector, personal care, engineering, power and textiles.

However, for the industry, a major concern is the high land cost in the State.

Tamil Nadu has its natural strength in skilled manpower, an educated work force and a peaceful law and order situation.

Ports

These, along with the two major ports in Chennai, have contributed to drawing significat investments in the automobile sector and electronic hardware. But road connectivity, particularly to the Ennore port, has emerged a major grouse for the automobile sector.