Says rising power tariffs, inflated property tax rates hurting Small scale units

Situated within Visakhapatnam, Autonagar holds the distinction of being one of the largest industrial zones in Andhra Pradesh, offering livelihoods to almost 200,000 individuals.

This thriving hub hosts a multitude of MSMEs engaged in the production of food, plastics, textiles, construction, and real estate equipment.

It serves not only as a supplier to significant PSUs like RINL within the city but also caters to industries in the neighbouring states of Odisha and Chhattisgarh.

In fact, as per industry sources it is also a substantial contributor to Gajuwaka’s robust Gross State Domestic Product (GSDP).

Although Autonagar proudly enters its 50th year, the micro and small units based here have been reeling under high power tariffs and other surging costs making the functioning of their industrial units unviable.

‘Fluctuating fixed power charges in Andhra Pradesh, coupled with frequent increases in other additional fees every six months, have been negatively impacting the overall profitability of many of our units here’ said Mr Panduranga Prasad, President of Visakha AutoNagar Industrial Welfare Association (VASSIWA), speaking to Vizag Industrial Scan.

VASSIWA, the 35-year-old association that looks into the holistic welfare of Autonagar units hopes that the state government steps in and reduces its power tariffs to make their products more competitive.

Similarly the units here have been burdened with inflated property tax rates.

Since 2021, property tax in Andhra Pradesh is being determined based on capital value however VASSIWA stresses that it should be determined on turnover and profits and not on the former. ‘Small-scale industries are vital to the Indian economy and therefore it is imperative for India to devise a ‘distinct property taxation approach’ for industries, which calculates taxes based on industry turnover and profitability and not on capital value’ said Mr Prasad. 

He further added that the valuation of an industry’s capital should be de-linked from factors affected by market fluctuations. Appreciating the increase in collateral-free loans from Rs 2-5crs by the CGTMSE, Mr Parsad noted that industries which were affected by the market shocks and volatility post-COVID have been unable to avail the benefits due to poor CIBIL scores.

The central government and RBI should take steps to ensure that such industries are provided some relief and handholding until they recover, said the President VASSIWA.

Similarly under the  Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFESI) Act, 2002 was formulated with an intent to empower banks to recover Non-Performing Assets (NPAs) without the intervention of a court. 

However Mr Prasad claimed that reconstruction companies seem to be primarily focused on selling off their assets in the real estate market, rather than actively assisting distressed enterprises in navigating their losses and facilitating recovery.