High VAT, gas cuts squeeze MP industries, shutdown fears rise

Indore: Industries in Madhya Pradesh have flagged a double hit of the country's highest VAT on natural gas and fresh supply cuts, warning of production disruptions and potential shutdowns, and seeking urgent intervention from the Petroleum and Natural Gas Regulatory Board (PNGRB).Industry bodies said MP continues to levy around 14 per cent VAT on natural gas, making industrial fuel costlier by nearly 9 to 11 per cent compared to states such as Gujarat and Maharashtra, even as supplies have now been curtailed to about 55 per cent of average consumption.Compared with MP's 14 per cent VAT, neighbouring states offer significantly lower rates, like Gujarat levies around 5 per cent VAT, Maharashtra about 3 per cent, Chhattisgarh has reduced it to 5 per cent, Rajasthan to around 7.5 per cent, and Uttar Pradesh stands at about 10 per cent."MP continues to have the highest VAT on natural gas in the country. With supplies now restricted, industries are facing a severe cost disadvantage, impacting production and competitiveness," said Gautam Kothari, president, Pithampur Audhyogik Sangathan.In a recent letter to the Petroleum and Natural Gas Regulatory Board, the Pithampur Audhyogik Sangathan sought reduction of VAT to around 5 per cent to bring parity with competing states, and called for a joint meeting of the state govt, PNGRB, and gas suppliers to address supply constraints and pricing issues.Industry bodies said the combined impact is now directly hitting production planning across sectors such as auto, pharma, and engineering, with several units operating below capacity.Yogesh Mehta, president, Association of Industries MP, said the situation is becoming critical.