India plans to impose 14% custom duty on power equipment import [Jan 2012]

January 11, 2012 10:33 am

In meeting the country’s commitment towards large capacity addition during 11th Five Year Plan, the power utilities have been sourcing equipment from domestic as well as foreign manufacturers based on their techno-economic evaluation.
The government is considering imposing import duty on Chinese power plant equipment, which gets an unfair advantage in the Indian market because of availability of cheap credit in China. A Committee which was set up by the government to look into disadvantages being suffered by the domestic manufacturers of power equipment recommended for imposition of 14 per cent custom duty on import of equipment for mega power projects. Accordingly, the government has circulated a draft Cabinet note proposing imposition of 14 per cent duty on imports of power equipment, a proposal aimed at providing a level-playing field to domestic manufacturers like BHEL and Larsen & Toubro. The government had also announced a National Manufacturing Policy in an effort to promote the domestic capital goods industry.
According to the Central Electricity Authority (CEA), about 50,757 MW thermal generation capacity is likely to be added as per midterm appraisal of 11th Plan, with high degree of certainty out of which orders for main plant equipment for about 16000 MW capacity have been placed on Chinese suppliers. In addition, out of the 10480 MW thermal projects of 11th Plan on best effort basis, orders for main plant equipment for about 5100 MW have been placed on Chinese suppliers. In Hydro Power sector, about 334 MW capacity with TG set supplied by Chinese manufacturers has already been commissioned in the 11th Plan and about 170 MW is under construction.