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Govt to give level playing field to domestic power gear firms

Indigenous power equipment makers have been demanding a levy of 14% duty on imported equipment, mainly arising from China, in order to provide them a cushion against the local taxes. However, the move is being opposed by private power produces who argue that it would increase the cost of power

New Delhi: Giving some comfort to BHEL and Larsen and Toubro, the government has broadly agreed for a ‘level playing’ field to the domestic power equipment manufacturers against imports— mainly from China at zero or low duty, reports PTI.

At a meeting convened by minister for heavy industries and public enterprises Praful Patel, there ‘seemed to be a consensus’ for ensuring that the domestic manufacturers like BHEL and L&T should be given a level-playing field over Chinese imports.

Besides the industry players, senior officials of the ministries of heavy industries, power and commerce attended the meeting.

However, there was no decision on a proposal for levying 14% duty on the imported equipment.

“We are not asking for protection, only level playing field... there seems to be a consensus on this,” CMD L&T AM Naik told reporters after the meeting.

Indigenous power equipment makers have been demanding a levy of 14% duty on imported equipment, mainly arising from China, in order to provide them a cushion against the local taxes.

The move for import duty is being opposed by the private sector power producers.

“Imposing customs duty is likely to have adverse implications for the capacity addition programme and financials of the sector as it is likely to increase cost of power,” Association of Power Producers director general Ashok Khurana said.

However companies such as BHEL, which have been lobbying for imposition of this duty, argue that the impact of import duty imposition on power tariff would be minimal and can be dealt with.

“There would only be 1%-2% increase in the power cost which can be mitigated by working on the efficiency of the project,” BHEL chairman and managing director BP Rao said.

Companies like L&T, BHEL, Bharat Forge and Thermax feel that the government should re-visit the import duty proposal which was put on the backburner last year.

“Earlier there was not enough indigenous manufacturing capacity, but now this argument is not valid,” Mr Naik said adding that at present the country has 20,000MW capacity and another 15,000MW is underway.

Currently, projects with less than 1,000MW generation capacity attract 5% import duty while the rest enjoy duty-free import of equipment.

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