Positive move but cuts import options for local mfg: BHEL

He also denies any link between the Cabinet's decision today and the divestment of the government’s stake in BHEL.

Below is the edited transcript of the interview on CNBC-TV18.

Q: L&T and BHEL rallied on account of the possibility of this decision being taken. Today, it's a reality. What's your reaction?

A: Whatever has been in the news regarding the approval of import duty by the Cabinet, it is the detail that is really important. This includes details such as the time from when the decision is going to be applicable. However, this is a positive move for the Indian industry.

The domestic industry is in line with the government's policy for the manufacturing sector, to increase the contribution of manufacturing to a large extent to the GDP. The power sector is contributing quite a lot to the manufacturing segment.

But I must clarify that Indian manufacturers will face difficulties in importing a few materials as they are not available in the country. So, the net advantage is only about 5% custom duty and 12% CVD and the 4% SAD. The real benefit for domestic manufacturers is only 4%, against 14%. So 10% gap is still present an advantage for foreign vendors.

Q: Do you now expect the divestment process in BHEL to resume because a decision on this matter has been finally taken?

A: As far as I am aware, this is not linked to any divestment of the government shareholding in BHEL, but that’ the government’s call and I am not aware that there is any link with that.

Q: I want you to respond to the criticism and the charges that for instance Khurana of Association of Power Producers (APP) is making that in order to protect domestic manufacturers like BHEL and L&T the government has actually sacrificed an already uncertain future of power producers?

A: I don't think it is true, it unfounded. I have already mentioned earlier, there are number of things, which have been said, that the tariffs will go up and the power plants will not be commissioned. All that is not correct and is unfounded.