I got your back, says Praful Patel to power companies

Excerpts from India Business Hour on CNBC-TV18 Watch the full show »

Heavy industries minister Praful Patel today met power minister Sushil Kumar Shinde to discuss the possibility of import duty in power equipment.

Patel stressed on the need to regulate imports in the coming five years. The power ministry has moved a cabinet note on levying import duty, but the exact quantum of tariff is yet to be decided.

With Patel backing Indian power equipment manufacturers, what does this mean for power companies who have so far been able to source cheaper equipment from China?

With several private sector companies importing cheaper equipment from china, at negligible or no duty, domestic power equipment manufacturers like BHEL and L&T are crying foul.

The heavy industries minister has moved a cabinet note on levying import duty on power equipment and asked for the PM's intervention so that domestic players can operate on a level playing field.

He added, "The 11th plan target were to be met and imports were freely allowed but we feel that now in the 12th plan imports need to be regulated by some way of a duty structure. What we are pursuing is the Arun Maira committee's recommendations. The power ministry has some views based on the committee of secretaries recommendation." He is certain these issues will be resolved in the Cabinet but he emphasizes that duty structure needs to be brought in.

The rate of import duty though is another point of contention. While, the power ministry has proposed imposition of 14% import duty, the industry's ministry wants it at 19%.

Power minister Sushil Kumar Shinde said, "The proposal has already been sent to the government to put a duty structure in place and is under consideration."

But it's a tricky issue because at the other end of the argument you have the power producers who are opposing the move as duties on equipment will make business more expensive for them.