Industry Rattled: GST Hike Threatens India's Energy Independence
The GST increase on capital goods in India's oil, gas, and CBM sectors raises operational costs, potentially deterring investments and undermining efforts to reduce import dependence. FICCI urges the government to reconsider the hike to align with fiscal stability goals and boost domestic natural gas production.
- Country:
- India
The recent increase in GST on capital goods for the oil, gas, and coal bed methane (CBM) sectors has sparked concerns about higher operational costs, according to an industry association. In a letter to Oil Minister Hardeep Singh Puri, the Federation of Indian Chambers of Commerce and Industry (FICCI) warned that the hike could hinder efforts to cut import dependence.
The association stressed that the GST increase from 12% to 18% contradicts the objectives of the Oilfields Regulation and Development Act, which aims to provide fiscal stability for upstream exploration and production operators. India imports a significant portion of its oil and gas requirements, with the government focusing on increasing domestic production.
FICCI's letter emphasized the potential impact on investment and investor confidence, arguing that the GST hike is at odds with existing contracts and could lead to an uptick in natural gas imports. The industry body recommended reducing the GST burden to support the government's goal of integrating more natural gas into the country's energy mix by 2030.
Google News