The Tamil Nadu Power Distribution Corporation's mandate for additional security deposits has sparked outrage among micro and small-scale industries, raising concerns over manufacturing growth.
- Tamil Nadu Power Distribution Corporation has issued notices for additional security deposits to MSMEs.
- The deposit amount is calculated based on the average electricity consumption of the preceding 12 months.
- Industry leaders are calling for electricity rate reductions instead of increased financial burdens.
COIMBATORE: In a move that has blindsided the manufacturing sector, the Tamil Nadu Power Distribution Corporation has begun issuing notices to micro and small-scale industries demanding additional security deposits. This sudden financial requirement has created significant distress among small-scale entrepreneurs who are already struggling with rising operational costs.
J. James, President of the Tamil Nadu Association of Cottage and Micro Enterprises, expressed deep concern, stating that the move reflects a lack of government support for the growth of manufacturing industries. He emphasized that instead of fostering an environment for industrial expansion, the current policies are placing an undue burden on the smallest players in the economy.
The New Calculation Framework
According to notices received by micro-units in Coimbatore, the security deposit is reviewed every two years. The updated requirement is structured as follows:
| Billing Type | Requirement Calculation |
|---|---|
| Monthly Billing Consumers | 2x the average monthly electricity charges (based on last 12 months up to April 2026) |
| Bi-Monthly Billing Consumers | 3x the average monthly electricity charges (based on last 12 months up to April 2026) |
The difference between the existing deposit and this new calculated amount must be paid as an additional security deposit.
Why This Matters
BozokMedia analysis shows that micro-industries are highly sensitive to cash flow fluctuations. Sudden capital requirements for security deposits can deplete working capital, potentially leading to reduced production cycles or even unit closures. In a competitive global market, the cost of energy remains a critical factor for the survival of MSMEs.
The imposition of additional security deposits at a time when industries are seeking lower energy tariffs is counter-intuitive to industrial growth.
While local energy department officials have suggested that units can settle the dues in two or three installments, industry representatives argue that this is a temporary fix. They are demanding a systemic reduction in electricity charges to provide genuine relief to the manufacturing sector.
Frequently Asked Questions
1. Why am I receiving a notice for an additional security deposit?
The security deposit is reviewed biennially. The notice is issued to align your existing deposit with your recent electricity consumption patterns.
2. Can industries pay the amount in parts?
Yes, according to local energy officials, micro-units have the option to pay the required amount in two or three installments.