Himachal industry rebuts ‘low GST gain’ narrative

Even as Himachal Pradesh positions itself as a non-consumer state that derives limited benefit from goods and services tax (GST) generated by its industries, investors argue that the government’s repeated assertion overlooks the substantial revenue it collects through state-level levies and duties.

Industrial stakeholders point out that beyond GST, the state exchequer receives several hundred crores annually from a range of taxes and cesses. Certain Goods Carried by Road Tax (CGCR) and additional goods tax (AGT) together contribute an estimated Rs 250–300 crore every year to the State Taxes and Excise Department. In addition, industries pay value added tax (VAT) on petroleum products such as petrol, diesel and high-speed diesel used to run machinery.

Electricity duty (ED) is another significant source of revenue. Industries currently pay up to 16 per cent ED to the state government. Though the duty was raised to 19 per cent in 2023, the hike was later reduced to 16 per cent following a High Court order that capped the increase. Even at the current rate, ED translates into several crores annually.

Cement companies remain among the largest contributors. Revenue accrues through royalty on mineral extraction, contributions to District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) funds, CGCR and AGT, GST, entry tax at inter-state barriers and electricity duty.

Estimates suggest the state earns nearly Rs 2,500 crore annually from the cement sector, approximately Rs 1,500 crore from the Ambuja Cements and ACC plants of the Adani Group and about Rs 1,000 crore from UltraTech Cement. Additionally, the government collects nearly Rs 20 crore annually through milk cess and environment cess imposed on cement manufacturers.

Officials note that district-level mining funds finance local development works, including maintenance of school buildings, water channels and village roads. A park near the Shamlech tunnel on the Kumarhatti-Solan highway was also developed using such funds.

Despite these contributions, investors express dissatisfaction over the condition of infrastructure in key industrial clusters such as Baddi-Barotiwala-Nalagarh, Darlaghat, Parwanoo, Paonta Sahib, Kala Amb and Una. They contend that roads, civic amenities and logistical facilities remain inadequate, raising concerns about the state’s long-term industrial competitiveness.