New Delhi: Of the various infrastructural challenges small and medium manufacturing enterprises face today, perhaps the one that demands immediate attention is the problem of power supply.
A recent CII Survey, Supply of Power and Competitiveness of Small and Medium Enterprises in India, says that while inadequate and erratic transmission have been adversely impacting the bottomlines and the productivity of SMEs in India, the loss to the economy as a whole is 1-5% of GDP annually.
Ravi Poddar, chairman, SME Forum, CII says, “In fact, problems of Indian SMEs due to poor power supply are bigger than the credit problem this sector faces.”
Among the host of problems faced by manufacturers is that of dip in voltage. For instance, if the high-tension (HT) supply dips to 9kv from 11kv, the shopfloor will see a shortfall of 350-380 volts, which will impede production and force disconnection to the State Electricity Board (SEB) supply. The unit will then be compelled to install a diesel generator to continue operations.
SMEs are unable to afford alternative sources of power generation as these tend to be very costly and apply further pressures on the bottomline.
The survey reveals that in certain cases officers of the electricity department visit SMEs and impose fines on the basis of connected load and not actual load, being used in the industry. Such arbitrary actions by electricity department offices only add to the woes of the consumers.
Regarding the transmission discrepancies, the survey estimates that if state governments were able to reduce transmission and distribution losses by even 1%, — in some states these losses can run up to 40% — they would save Rs70 crore. CII wants state governments to completely remove the cess of 15-20 paisa per unit imposed on the generation of captive power in the 2004 -2005 budget.
The industrial body has also called for cluster-based approach in power supply and incentives to the SMEs for the use of alternative and non-conventional sources of energy in their production process.