Facing competition from industries located in Himachal Pradesh, where special incentives are offered to them, Mohali businessmen are feeling the pinch as after power cuts, now increased VAT rate will cause further business loss to around 12,00 units located here.

The state government has decided to increase VAT from existing 4% to 5% on scheduled-B goods. Though a delegation had met the chief minister on the issue, no final word has come from him.

In Mohali, compulsory weekly cut of 12 hours, from Saturday 8 am to 9 pm, had been imposed which is leading to production loss. And now, the decision to increase VAT, when neighbouring states have not, has caused resentment among industrialists.

After Himachal Pradesh started giving special sops with the help of Centre, the state government should have made efforts to help industries here.

But the fresh decision shows that units will continue to struggle, said BS Anand, president of Mohali Industries Association.

As the increased VAT rates would lead to rise in production cost, competitors in other states would take benefit of the situation and supply the same product at lower rates, he added. Supplies from Mohali industries to rail coach factory and other government establishments would be affected, he said.

He alleged that instead of providing better infrastructure like good roads, regular power supply and special incentives, the government was taking decisions which were creating more problems for the industrial sector. While the exporters are not getting VAT refund for months, for others, the condition of submitting C-form along with VAT returns has been imposed. As C-form is not available, industrialists are not able to file the returns, he said.