BENGALURU: The Federation of Karnataka Chambers of Commerce & Industry (FKCCI) has expressed serious concerns over Karnataka Electricity Regulatory Commission’s (KERC) tariff hikes across electricity supply companies (ESCOMs).
“The decisions, which include tariff hikes across ESCOMs and retrospective billing for industrial and commercial consumers, are expected to have a far-reaching adverse impact on Karnataka’s industry, trade and overall economic growth,” said FKCCI President Uma Reddy.
She highlighted that these decisions will severely disrupt working capital cycles due to sudden backdated liabilities, forcing businesses to divert funds earmarked for operations, salaries and raw materials. The retrospective nature of these revisions distorts financial planning, pricing strategies and profitability, while also impacting advance tax computations and exposing businesses to compliance risks.
The increase in power costs, a critical input for industries, will escalate the cost of production, reduce competitiveness, and adversely affect supply chains and pricing across sectors.
“The revision of power tariffs is deeply concerning and unacceptable. Industries cannot be expected to absorb sudden financial shocks for past periods where pricing decisions have already been concluded. Such measures severely disrupt working capital, distort financial planning and erode already thin margins, particularly for MSMEs, which are the backbone of Karnataka’s economy,” Uma Reddy said.
She added, “We are witnessing a growing trend where the burden of subsidies is increasingly being shifted onto industrial and commercial consumers. Subsidy support is the responsibility of the government and should not be indirectly recovered from productive sectors. This approach places an unfair and unsustainable burden on industry.”
Highlighting the broader implications, the FKCCI chief said, “Policy stability and predictability are critical for investor confidence. Retrospective tariff implementation sends a negative signal to both domestic and global investors and may hinder Karnataka’s industrial growth trajectory. MSMEs in particular will face severe financial stress, which could impact their survival and future growth.”
FKCCI has urged the authorities to reconsider the retrospective tariff implementation.