TN Govt to forego VAT on naptha for two fertiliser plants

The Tamil Nadu government today offered to forego VAT on naphtha used by two fertiliser plants in the state to ensure continuance of subsidy for them, keeping in mind the interest of farmers and workers of the factory.
In a letter to Prime Minister Narendra Modi, Chief Minister O Panneerselvam requested the Centre to issue the notification for continuance of the subsidy immediately to SPIC, Tuticorin and Madras Fertilisers Ltd, which had been shut down on October 1 last due to lack of communication regarding the same.
He recalled that following a demand by his predecessor J Jayalalithaa in June, subsidy for the two plants had been extended upto September.

They were shut down on October 1, 2014 since no decision had been communicated regarding continuance of subsidy which Panneerselvam said he had highlighted with Modi.
The Union Fertiliser Secretary had informed the state government that the Centre had decided to allow the operation of these units for another 100 days and that he had also asked Tamil Nadu to consider waiving VAT on naphtha used by them.
The notification for the continuance of subsidy had not yet been issued pending the confirmation from the Tamil Nadu Government on the waiver of VAT, the Chief Minister said.

He said Tamil Nadu was already facing 'huge financial crunch' and any additional financial outgo at this juncture would be very difficult to manage.

"However, in the interest of commencing the operations of these two plants, the livelihood of hundreds of workers and the interest of farmers, the Government of Tamil Nadu is willing to forego the VAT on naphtha used by the two urea producing fertilizer plants," he said.
The Chief Minister reiterated an earlier plea by Jayalalithaa that subsidy be continued till gas connectivity was provided to these two units by Centre.
He requested the state's allocation of urea may be made from these two plants for logistics and other reasons.
He also said oil marketing companies should claim only the export parity price for naphtha supplied to the fertiliser units instead of import parity price.