Subsidy must be given to low-power generators: trade body

The Tamil Nadu Small and Tiny Industries Association (TANSTIA) has called upon the State government to give subsidy being given to high-power generators to the smaller gensets also as they are used largely by the micro, small and medium enterprises (MSMEs).

While thanking the government for enhancing the capacity of generators eligible for subsidy from 125 KVA to 320 KVA and increasing the ceiling of subsidy to Rs. 5 lakh from Rs.1.50 lakh with effect from November 11, 2008, the trade body said that most of the small units used only smaller generator sets with a capacity of 10 KVA to 30 KVA and will not benefit from the subsidy.

TANSTIA vice-president KR. Gnanasambandan told The Hindu on Tuesday that the small industries were already facing severe problems such as the steep increase in diesel prices, escalating bank interest rates and huge rise in raw material prices. Further, the frequent power cuts were resulting in the units paying the wages to employees without extracting work.

Of the six lakh units in Tamil Nadu, more than half of them either did not use power or consumed only a small quantum. Out of the remaining three lakh units, around 30 per cent were using more than 30 KVA and have benefitted from the generator subsidy given so far. Around 20 per cent of the units were using power in the range of 10 KVA to 30 KVA and did not avail any subsidy from the government for purchasing generators. However, with the power crisis getting worse, these units were unable to carry of production without the help of a gensets. “If the Government extends a 25 per cent subsidy for the purchase of gensets with a capacity of 10 KVA to 30 KVA, that will be of immense benefit to the small Industries and save them from closure.”

He said that the average price of a 10-30 KVA genset was around Rs. 2.5 Lakh and the 25 per cent subsidy would work out to around Rs. 62,500. If 25,000 units availed the benefit, the government may have to spend around Rs. 156 crore. However, this amount could result in the small units generating more employment and enhance the tax revenue of the government.