Tamil Nadu’s textile industry calls for ‘moderation’ of electricity tariff hike
The Tamil Nadu textile industry has urged the state CM to moderate the rise in electricity tariffs even as the Tamil Nadu Electricity Regulatory Commission notified the revised tariff orders for energy charges and the various services provided by TANGEDCO.
The surge in services would erode the competitiveness of HT/EHT consumers, especially the energy-intensive sectors of the state’s textile industry.
The approximate increase in net electricity tariffs for the textile industry amounts to 1 rupee per unit, and the manufacture of 1 kg yarn requires an average of 5 units and thus increases the price of yarn by 5 rupees per kg. This would affect the competitiveness of the downstream. sectors such as looms, looms, garments and tailoring which have already spoken out against any increase in the price of yarn.
According to experts, for a spinning mill having 25,000 spindles, the increase in electricity tariff per year would be around Rs.1.2 crore.
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The industry is convinced that the increase in demand charge from Rs.350 per KVA to Rs.550 KVA is an abnormal rise compared to most states in the country. The increase in peak hours from 6 to 8 hours as well as the increase in peak hour charges from 20 to 25% are very high.
It can be mentioned here that the textile industry of Tamil Nadu, which accounts for 1/3 of the country’s textile business size and about 45% of the nation’s spun yarn (spinning) manufacturing capacity, earns about Rs .1 lakh crore forex, provides direct employment to over 60 lakh people in the state, paying around Rs 4,000 crore SGST etc.
Ravi Sam, chairman of the Southern India Mills Association (SIMA), said the energy-intensive textile industry would become uncompetitive with the recent sharp increase in the electricity tariff. “The state is already uncompetitive and could not make significant investments in modernization, capacity expansion and greenfield projects compared to commodity-rich states (cotton and man-made fibers) like the Gujarat and Maharashtra,” he said.
The cost of electricity represents more than 40% of the cost of production and with the revised electricity tariff, state spinning and weaving mills would become uncompetitive.
While appreciating the tariff review after a period of 5 years, SIMA President said that TNERC had not taken into account the erosion of global competitiveness of energy-intensive sectors like textiles.
He said that although the state government has made concerted efforts to attract investments of over Rs 2.2 million through attractive industrial policies, the revised tariff will become detrimental to new investments.