Industrial belts urge govt to cut VAT on fuel after hike in power tariff

Indore: Major industrial areas of Madhya Pradesh, including Pithampur, Mandideep and other manufacturing clusters around Indore, have expressed concern over the recent electricity tariff hike approved by Madhya Pradesh Electricity Regulatory Commission (MPERC), saying the increase will raise operational costs at a time when businesses are already facing global cost pressures.

The commission has approved an increase of about 4.8 per cent in power tariffs for 2026–27, with the revised rates set to come into effect from April 3, 2026.


Industrial associations have suggested that state govt consider reducing VAT on industrial fuels such as natural gas and furnace oil to around 3-4 percent from the current 14 percent to offset the impact of the tariff hike on manufacturing units.

Industry representatives say electricity is a critical component of production for manufacturing units and even a moderate increase in tariff can significantly impact operating costs.

Pithampur Audyogik Sangathan president Gautam Kothari said, "The tariff increase will directly raise the cost of manufacturing. In the current global and domestic market conditions, when industries are already grappling with rising raw material prices, higher electricity tariffs will make products from Madhya Pradesh less competitive compared with neighbouring states like Gujarat and Maharashtra."

He said that the impact would be particularly severe for the MSME sector, which operates on tighter margins and limited working capital.

Association of Industries Madhya Pradesh secretary Tarun Vyas said, "The electricity hike has come at a time when the West Asia conflict has already made industrial operations expensive due to higher fuel, shipping and raw material costs. This will further increase the cost of operations for industries."

An industrialist from Mandideep industrial area near Bhopal Rajesh Mehta said the tariff revision would add to existing cost pressures faced by manufacturing units.

"Industries are already dealing with higher input costs and uncertain global demand. Any increase in electricity tariffs directly impacts production cost and pricing. It becomes difficult for units to absorb these additional expenses without affecting competitiveness," Mehta said.

Industry bodies have also suggested that the govt make solar energy adoption easier for industries and rationalise the fixed charge structure so that units pay more in proportion to their actual electricity consumption.