The Indian Electrical and Electronics Manufacturers' Association (IEEMA) on Thursday welcomed the government move to slap import duty on power equipment and called for levying the duty on mega and ultra-mega power projects over 1,000 MW as well.
"The issue of providing a level playing field for domestic manufacturers of electrical equipment vis-à-vis imported equipment has been debated for long at the highest levels of the government and action must now be taken immediately," IEEMA president Ramesh Chandak said in a statement.
The Prime Minister's Office on Wednesday asked the power ministry to float a new cabinet note on increasing duty on imported power equipment, mainly from China, and to provide a level playing field to domestic manufacturers.
The power ministry is likely to suggest the quantum of overall levy on overseas gear at 19%, as proposed in the earlier cabinet note, sources said. Equipment imported for projects of under 1,000 MW curently attracts 5 percent customs duty, while those above that are exempt.
"The entire industry is in doldrums because of sluggish growth and escalating imports of electrical equipment. It is in the danger of becoming commercially unviable," he said. The power equipment industry is 10.56% of the manufacturing sector in terms of value and 1.5% of GDP. It also provides direct and indirect employment to 1.5 million people, besides over 5 million across the entire value chain, the release said.
The industry stood at Rs 1,10,000 crores in FY11, comprising two segments - generation equipment which constitutes 24%, while transmission and distribution (T&D) as well as allied equipment contributes the rest at 76%.
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