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21% duty slapped on import of power fears; APP cries foul

Jul 24 2012, 12:28   |   By PTI

The government today decided to slap 21% duty on imports of power equipment, mainly to protect domestic companies from cheap Chinese shipments. "Cabinet has approved levying 21% import duty on power equipment sourced from overseas," sources said.

The Cabinet has approved 5% basic customs duty, 12% counter-veiling duty and 4% special additional duty on import of power gear. Earlier this month, the power ministry had floated a proposal seeking higher duty on import of equipment for the power sector.

The power ministry had proposed 5% basic custom duty, 10% counter-veiling duty and 4% special additional duty. Besides, with the recent hike in excise duty of 2%, the overall import duty would be 21%.

At present, equipment imported for projects of less than 1,000 MW capacity attract 5% customs duty, while those above that enjoy exemption. The proposal is aimed at providing a level-playing field to domestic manufacturers such as BHEL and Larsen & Toubro against cheap imports, especially from China.

However, private power generation companies expressed dissatisfaction.
 "It will increase the cost of power. The government has only gone by the protection of domestic equipment makers. They have not really addressed the concerns of private power generation companies," Association of Power Producers (APP) director General Ashok Khurana said.

Late last month, the Prime Minister's Office had directed the power ministry to prepare a fresh Cabinet note on the issue. In May, the Cabinet had deferred the proposal to raise the duty on imported power gear. The three ministries -- Power, Commerce and Industry and Heavy Industry -- had differences on the quantum of basic customs duty that can be slapped on power gear imports.

While the power ministry pitched for 5%customs duty, commerce and heavy industry ministries sought 15% and 10%, respectively. A panel headed by Planning Commission Member Arun Maira in its report had suggested imposition of 14% levy with a customs duty of 10%.

 


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  •  Chanduru |   Jul 19 2012,09:30

    Hat off to Government. This not only protect domestic industries but also prevent import of inferior power equipments from China. It is commonly known that Chinese power equipments, albeit cheap in price, are inferior as far as quality is concerned when compared to power equipments manufactured in Europe [Germany, France and Japan]. The power equipments produced in India, quality-wise, are very good.

  •  Guest |   Jul 19 2012,09:27

    Idea of this impost is to provide a level playing field. If the worry is about tariff increases, then indigenous supplies of equipment to these projects should be exempted from local levies or reimbursed. Given the fiscal situation, this may not be feasible. Hence the duties.

  •  Guest |   Jul 19 2012,09:26

    Yamuna Nagar thermal - Eyebrows raised about Chinese equipment quality Eyebrows are being raised about the quality of Chinese equipment and after sales service as 300 MW unit no. 2 at Yamuna Nagar thermal power station is under forced shut down. According to information received under RTI, the unit 2 is under forced shut down since September 25, 2011 due to high eccentricity and vibration at turbine bearing no. 1. The unit was commissioned on June 24, 2008 and has a total running hours of 24,180 only. The daily generation loss of 72 lakh units is worth Rs. 2 crore for Haryana Power Generation Corporation Limited (HPGCL). After the closure of unit on September 25, two Chinese engineers stationed at Khedar thermal visited the site on September 28th & 29th but could not solve the problem. HPGCL sent urgent message on October 1 to Reliance Infra and Shanghai Electric Company (SEC) for sending experts to rectify the problem at the earliest as the unit is under forced shut down and there is power demand in the state. The visit of Chinese engineers was again stressed on urgent basis to avoid it becoming impediments in FTO and requested for experts latest by October 12. Documents received under RTI reads, “top management of HPGCL has taken a very strong note of situation that SEC is not able to quickly respond under SOS conditions to mobilize the support and service of Chinese experts. This is not only causing financial losses to HPGCL but is also making them concerned about ‘after sales service’ capabilities of SEC”. The 5 member team of SEC engineers from China visited the plant from October 15th to November 2nd followed by visit of another expert from November 16th to 27th.It was found that there is sag in the rotor of turbine. As per RTI information dated January 31st, the firm to attend the rotor fault has yet been finalized even after a lapse of more than 4 months. However, according to official sources, the rotor has been sent on January 31st from Yamuna Nagar to the works of Siemens Baroda and it reached there on February 8th. According to Haryana Power Minister’s statement, it may take another 4 to 5 months to synchronize the unit. As per CEA report, the 600 MW Yamuna Nagar thermal plant has reported a shortfall of 660 million units from April to January this year. As per CEA schedule, the plant was to generate 3553 MU whereas it actually generated 2892 MU. A senior engineer said the fallout of Chinese equipment is now being felt. It may be mentioned that the same unit was closed on February 22 in 2010 due to problem in emitting electrodes of Electrostatic Precipitators (ESP) and unit was restored on March 15. The 300 MW unit ran subsequently at 60 % capacity for next 8 months It may be mentioned that this unit remained under shut down and subsequently operated at half load reportedly due to defective design of ESP. HPGCL suspended one Executive Engineer operation to cover up the whole episode. He has been under suspension for the last five months without any fault. He was suspended on the presumption that the operation staff did not maintain requisite parameters and water entered inside the turbine. The enquiry committee constituted to look in to the incidence reportedly concluded that it was not the failure of operation staff but system failure. Not satisfied with its departmental enquiry committee report, the then MD of HPGCL sent the report to Central Electricity Authority (CEA) for further investigation. As the CEA team has not planned any visit to site, the fate of suspended executive engineer continues to hang in balance.

  •  Guest |   Jul 19 2012,09:24

    Let us see how China will react to this harsh decision taken by the GoI

  •  Guest |   Jul 19 2012,09:23

    I think you dont know how bhel & L&T work better visit some unit & have experience of how they work.if you are so efficient why you are not in government body.

  •  Guest |   Jul 19 2012,09:23

    I this Manmohan Singh has taken oath to kill the AAM ADMI..His economic reform agenda is how to make inflationary economy.

  •  sonu11 |   Jul 19 2012,08:58

    This will raise the tariff of electricity, which will be paid by the millions of consumers. Just to keep few thousands inefficient and noncompetitive BHEL and LT and etc employee. I think paying them directly will be cheaper option for millions of consumer instead of paying for their inefficiency by way of tax to which goes to government , and high prices that go to in efficient lot and to top it all interest on higher cost. No not done pay them salary through direct contribution

  •  romik009 |   Jul 19 2012,08:55

    Great news for domestic power equipment manufacturing companies! The market will cheer this tomorrow! and probably for some time to come! HUGE positive for LnT, BHEL, Bharat Electronics, BEML and other equipment manufacturers in the large cap space, Genus Power, EON Electic, in the small cap space. Second order impact will also benefit Iron/Steel producers. A good play for this would be Rohit Ferro Tech.

  •  Guest |   Jul 19 2012,08:48

    If import duty is imposed on imports of power gear, there should also be a matching import levy on the raw materials, components imported by domestic manufacturers like L& T,BHEL, JSW POWER and ALSTOM & ALSTOM-BHARAT FORGE to prevent unnecessary jacking up of profit margins/prices by domestic manufacturers... M.N.khosla

  •  Economist |   Jul 19 2012,08:22

    How this move affect the economy?