Industries in Madhya Pradesh Sound Alarm Over Natural Gas Crisis
Industrial units across Madhya Pradesh are raising urgent concerns about a dual crisis involving the country's highest Value Added Tax (VAT) on natural gas coupled with significant supply reductions. Industry bodies have issued warnings about imminent production disruptions and potential shutdowns, calling for immediate intervention from the Petroleum and Natural Gas Regulatory Board (PNGRB) to address this escalating situation.
The VAT Disadvantage: MP's Highest Rate in India
Madhya Pradesh continues to impose a VAT of approximately 14 percent on natural gas, which industry representatives highlight as the highest rate in the entire country. This substantial tax burden makes industrial fuel costs in MP significantly more expensive compared to neighboring states. Specifically, industrial fuel costs are nearly 9 to 11 percent higher in Madhya Pradesh than in states like Gujarat and Maharashtra, creating a severe competitive disadvantage for local industries.
Comparative VAT Rates in Neighboring States:
- Gujarat: Approximately 5 percent VAT
- Maharashtra: About 3 percent VAT
- Chhattisgarh: Reduced to 5 percent
- Rajasthan: Around 7.5 percent
- Uttar Pradesh: Stands at about 10 percent
"Madhya Pradesh continues to have the highest VAT on natural gas in the country," stated Gautam Kothari, President of the Pithampur Audhyogik Sangathan. "With supplies now restricted, industries are facing a severe cost disadvantage that directly impacts production capabilities and overall competitiveness."
Supply Cuts Exacerbate the Crisis
Compounding the VAT issue, industries are now grappling with fresh supply cuts that have reduced natural gas availability to about 55 percent of average consumption levels. This dual impact of high taxation and restricted supply has created what industry leaders describe as a perfect storm threatening manufacturing operations across multiple sectors.
The combined effect is now directly affecting production planning in key industrial sectors including automotive, pharmaceuticals, and engineering. Several manufacturing units are reportedly operating below capacity due to these constraints, with industry bodies warning that the situation could deteriorate further without prompt action.
Industry Calls for Urgent Government Intervention
In a recent formal communication to the Petroleum and Natural Gas Regulatory Board, the Pithampur Audhyogik Sangathan has proposed specific measures to address the crisis. The industry body has requested a reduction of VAT to around 5 percent to establish parity with competing states and has called for a joint meeting involving state government representatives, PNGRB officials, and gas suppliers to comprehensively address both supply constraints and pricing issues.
Yogesh Mehta, President of the Association of Industries Madhya Pradesh, emphasized the growing severity of the situation. "The circumstances are becoming increasingly critical," Mehta stated, highlighting the urgent need for regulatory and governmental intervention to prevent widespread industrial disruption.
Industry representatives argue that without immediate corrective measures, the dual challenges of excessive taxation and supply limitations could force production cuts, job losses, and potentially permanent shutdowns of manufacturing units across the state, undermining Madhya Pradesh's industrial growth and economic development.
