Jammu and Kashmir Industrial Sector Faces Higher Operating Costs Following Tariff Revision

Jammu and Kashmir’s industrial sector is set to face higher operating costs as a new electricity tariff comes into effect from September 1. Key energy charges for industrial consumers have risen by nearly 10 per cent, surpassing the 5 per cent increase initially proposed by the Kashmir Power Distribution Corporation Ltd (KPDCL) and Jammu Power Distribution Corporation Ltd (JPDCL).

The revised rates follow a tariff order issued by the Joint Electricity Regulatory Commission (JERC) on August 20. Under the new order, the energy charge for low-tension (LT) industry has increased from ₹4.20 to ₹4.60 per kVAh, marking a rise of 9.52 per cent. Similarly, for high-tension (HT) industry at 11 kV, the energy charge has risen from ₹4.10 to ₹4.50 per kVAh, translating to a 9.76 per cent increase. Fixed and demand charges have also been revised alongside these energy rates.

Industrial representatives have expressed concern that the unexpected hike will add to production costs at a time when businesses are already dealing with high expenses for raw materials, transportation, and other vital inputs. Mukhtar Ahmad, President of the Industrial Association at Industrial Growth Centre (IGC) Lassipora, noted that electricity is a direct production cost for manufacturing units, meaning even minor tariff increases significantly impact high power consumption units.

The tariff revision coincides with government efforts to strengthen the region's industrial base and encourage investment and expansion by existing units. However, industrialists warn that the elevated electricity costs may become an additional hurdle for businesses planning capacity expansion.

In response to the order, the Federation of Chambers of Industries Kashmir (FCIK) has formally opposed the increase and filed a review petition before JERC, seeking a reconsideration of the tariff order. The industrial body has questioned why the sector was subjected to an increase of nearly 10 per cent when the distribution utilities had only proposed an across-the-board increase of 5 per cent. FCIK argues that the higher tariff makes manufacturing more expensive and threatens the competitiveness of local industries.

Shahid Kamili, President and Head of the Advisory Committee of FCIK, pointed out that Kashmir’s geographical location at the far end of the country already drives up input costs due to higher transportation expenses for raw materials brought in from other states. He stated that any further increase in power tariffs would compound these challenges, making manufacturing in the region increasingly expensive.

"An unexpected utility cost increase of nearly 10 percent directly impacts the working capital and margins of manufacturing units, particularly in remote regions where logistics are already expensive. For growing businesses and regional enterprises, predictable input costs are essential for operational planning and capacity expansion. When regulatory revisions exceed initial utility proposals, it creates uncertainty for business owners trying to maintain competitiveness. Regulatory bodies and industry associations must engage in constructive dialogue to balance utility revenue requirements with the long-term economic viability of local manufacturing ecosystems." — Dr. Shishir Gupta, Founder & CEO, StartupLanes