Hyderabad: SMEs demand immediate release of due incentives

Hyderabad: Industrial units, particularly small and medium enterprises (SMEs), want the state government to immediately pay out the incentives due to them to ease their financial turmoil.

They voiced concern over a government proposal that the dues would be set off against tax arrears. “The decision of the government will not benefit new units. In fact it will slow down the early phase of development,” said an entrepreneur. 

This correspondent spoke to a group of industrialists who started their business units in the last three years. On condition of anonymity, they narrated how the non-clearance of incentives and subsidy was taking a toll on their business plans.

The total backlog of incentives and subsidies is estimated to be Rs 1,800 crore, including Rs 650 crore inherited from undivided Andhra Pradesh. The state government earmarked Rs 1,300 crore in 2018-19 budget for clearing the backlog. 

The total tax arrears from the industry including public enterprises stood at Rs 3,000 crore in 2017-18 fiscal. Under TSiPASS, the government is offering one-time incentives, regular incentives and skill set incentives. This attracted many units to the state. “The piling up of the money meant for incentives and subsidies over the past four years is creating a bumpy road of us,” said a senior industrialist, who held key roles in the industry chambers.

The government recently issued an order, GO MS 64, under which it would adjust tax dues from the industry against arrears of subsidy and tax incentives. The industry, particularly the new units, are not comfortable with this.

“We have pending reimbursement of power cost, SGST, skill upgrade cost, stamp duty, transfer duty, land conversion cost, investment subsidy. Ours is a new unit with just two years of commercial production and we don’t have any tax due,” an industry owner said.

“How can such GO address our problem. We want direct payment of incentives and subsidy into our company’s bank account. This will help us do business in a more competitive way,” he said.

“For investment subsidy, we need to apply within six months of the commencement of production. Otherwise, we will be eligible for only 50 per cent of the claimed amount. Considering this, we speeded up commercial production ahead of schedule by raising external debt. Because of the delay in releasing investment subsidy, the cost of debt is eating into our margins," said the chairman and managing director of a manufacturing unit in Ranga Reddy district. Non-payment of incentives and subsidy was causing sickness even for units with a long history of operations, said a consultant. 

Asked about the industry owners’ woes, principal secretary, revenue, Somesh Kumar said the state government was very keen on clearing arrears of subsidy and other incentives.

He highlighted a recent accomplishment and said, “A 15-year-long pending legal issue was resolved by adjustment of tax dues against incentives and subsidy. This will be a win-win situation for industry and the government.”