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Andhra Pradesh, which is home to one-fourth of the country’s port-based edible oil refining capacity, has decided to do away with tax incentives for new units as excess capacity stifled the existing units. In the newly formed state, edible oil refining units were eligible for a reimbursement of VAT at 2.5 per cent for big units 3.75 per cent for medium size units and 5 per cent for smaller units under the Industrial Policy 2015-2020. Encouraged by the tax incentives, units with a total refining capacity of 4 million tonnes have come up in Andhra Pradesh at the ports of Krishnapatnam and Kakinada in a short span of time. For an industry that operates on a thin 1-2 per cent margin, tax incentives make a huge difference.
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