Karnataka’s small scale industries are facing the heat of recent price hikes, which are expected to raise operational costs, squeeze profit margins, and potentially lead to job losses, according to industry players. The State recently announced a 3 per cent increase in sales tax on diesel, raising it 18.4 per cent effective from April 1. As a result, diesel prices in Bengaluru will rise from ₹89.02 to ₹91.02 per litre.

However, industry players have raised concerns over the adverse effects this hike will have on the sustainability of small businesses. These rely heavily on diesel for transportation, manufacturing, and power backup solutions. With the price of diesel witnessing a steep increase, businesses are finding it increasingly difficult to manage production costs. The situation is further exacerbated by supply chain disruptions, inflationary pressures, and rising raw material costs, players noted.

Further, industries are grappling with the recent hike of 36 paise power surcharge per unit, fixed charges, decision by KERC of passing on the burden to the consumers of pension and gratuity expenses of energy department employees, and property tax cess, along with the mandatory compliance with gratuity schemes, delays in issuing e-Katha are posing challenges for the MSME sector.

Industry representatives have urged the government to intervene by providing subsidies, reducing excise duties, or implementing policies that cushion the impact of fluctuating fuel prices on small businesses.

Published on April 2, 2025