GST Hike Threatens India's Energy Security

The recent Goods and Services Tax (GST) increase on capital goods used in the oil, gas, and coal bed methane sectors has raised alarm bells within the energy industry. The Federation of Indian Chambers of Commerce and Industry (Ficci) took its concerns to Oil Minister Hardeep Singh Puri, highlighting the hike's destabilizing effect on previously promised stable contractual and fiscal terms.

Ficci emphasized that the GST surge, from 12% to 18%, poses a significant financial strain on an industry already disadvantaged by the exclusion of natural gas from GST. The association warned that these increased project costs could deter much-needed investment in high-risk, long-gestation projects, ultimately contradicting national objectives such as energy security and the 'Make in India' initiative.

In advocating for policy revision, Ficci urged the government to reconsider the GST rates to support domestic production and investor confidence. It proposed allowing E&P operators to adjust GST on their inputs against government dues, a move that could boost energy security and reduce import dependency.