Finance Ministry has asked Corporate Affairs Ministry to exempt ailing insurance and banking firms from the scope of Competition Act
The country needs power urgently and in a large scale but if the indigenous equipment makers cannot meet the requirements, the government will have to relax the rules for greater imports
In the last few years, China has made great strides into the Indian electrical equipment market at the cost of indigenous makers, due to price, delivery and varying performance of such imported goods.
The Arun Maira Committee, after a detailed study on the effect of such imports on the Indian manufacturing scene, had recommended that importers of these power equipments need to pay a 14% duty. Now, BP Rao, chairman and managing director of BHEL has categorically stated that this quantum of duty is not adequate enough to protect the local industry to survive and develop. He has further contended that the actual net effect of protection in real terms is less than 5% and therefore not sufficient.
He has not spelt out what exactly he needs, but, perhaps increasing the duty to 20% from the current 14% may give a brief relief!
Leading Indian companies, who have plans to generate their own power, like Adani, Jindal and Reliance have sourced their requirements for their plants from Chinese suppliers like Dong Fang, Harbin and Shanghai Electric, due to price and delivery considerations. So far, the Chinese supplies have also not caused any major concerns in terms of performance.
So, with the continued order position from India and other importers, China has been able to improve its quality, increase production capacity and equipments have performed reasonably satisfactorily.
Indian manufacturers need to have full government support to perform by increasing their production capacity apart from qualitative improvement in performance. They need to match if not surpass Chinese equipment in every way so that Indian power generators and users give a ‘preferential’ treatment for makers like BHEL.
In a separate development, BHEL-associated projects in Tamil Nadu have made good progress. The North Chennai Thermal Power Project is likely to go on stream in October with the second unit slated to start in December this year. Also, the Vallur 1000MW plant is ready to commence power generation soon and its second unit a little later, though they have not specified the date.
Even the Tamil Nadu Electricity Board-Neyveli Lignite Corporation Tuticorin 1200 MW plant is progressing smoothly, and BHEL is the main equipment supplier.
However, BHEL’s project with the Tamil Nadu government, for setting up two units of 800MW plants at Udangudi has not got off the ground, though it was signed in 2007, apparently due to some issues and the later having decided to go on its own despite entreaties from BHEL. In fact, the Tamil Nadu government had accused BHEL for “lack of cooperation”, details of which were not made public, presumably because of the fair amount success achieved elsewhere by BHEL.
It is imperative that the government seriously reconsiders the element of protection for the domestic industry, and raises the import duty element from 14% to possibly 20% as the first step.
Second would be to pull up all the power equipment manufacturers for not only increasing their capacity but to introduce latest technology to compete with China effectively. The country needs power urgently and in a large scale but if the indigenous makers cannot meet the requirements, the government will have to relax the rules for greater imports.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)