Power gen equip import ban to boost local demand: BHEL ex CMD

The government's move to ban capital goods imports under the Export Promotion Capital Goods (EPCG) scheme for power generation will be a big positive for domestic companies, said BP Rao, former Chairman and Managing Director of BHEL in an interview to CNBC-TV18 on Monday.

Order inflows for the industry have relatively reduced, but this move will boost domestic demand, Rao said.

On the extent of competition from Chinese equipment suppliers, Rao highlighted that although Chinese imports were high 3-4 years back, they have gradually reduced since.

“Indian power generators have come back to domestic manufacturers because of better services,” Rao said, adding that the EPCG ban will make it even more difficult for Chinese players to participate in the domestic market.Below is the transcript of BP Rao’s interview with CNBC-TV18's Sonia Shenoy and Anuj Singhal.Sonia: How much of a positive would this really mean if the government indeed has gone ahead and banned capital goods import under the Export Promotion Capital Goods (EPCG) scheme?A: It is a well known fact that the capital goods demand itself has shrunk in the last 3-4 years and it has just started slightly to increase from this year onwards but under these conditions the good news that the capital goods imports are banned under EPCG scheme for the power generation sector definitely it will be a big positive for the domestic companies who are the manufacturers of these power plant equipments and that will definitely be a boost. The sector is slightly showing signs of revival and this will further add to that and definitely all these companies what you mentioned it will definitely be positive for all of them with that much more increase of the demand in the market.Anuj: Since you headed BHEL in the past and it was a hot issue when you were there at the helm of BHEL if you could quantify what this means for a company like BHEL?A: I don\\'t know quantification wise because under EPCG scheme how much imports are being done I don\\'t have any figures readily available. So that much more definitely will be available for the domestic companies as far as the demand is concerned, but mostly I must tell you the imports under EPCG for power generation equipment has been more or less confined to the lower levels of ratings. The higher level of ratings have been very less because the power generation equipment is one where it needs a continuous service and one has to be locally present to make the equipment work.Sonia: Do you have any indication of how much the Chinese imports were impacting the industry in the sense, what percent of the total industry uses Chinese imports, how much has it gone up by and if you can also just give us any indication of how much the rebate was earlier? Just to get a sense.A: The Chinese equipments were in the past about 3-4 years back the imports were quite high. They have almost received 50,000 megawatt and above kind of orders, the Chinese companies. But after the Chinese equipment performance in the market the Indian power developers have started turning towards domestic manufacturers particularly, who went in for the first sets of Chinese sets they have come back for domestic companies. In fact Chinese companies were also not able to compete with respect to the prices also in the market in the recent past. In fact domestic companies have nearly overbid them.I don\\'t see many of the Chinese companies participating in the market except one or two, Tamil Nadu state and all that, otherwise I don\\'t see them being participating in the market. So, that way Chinese companies prices have been coming down in the domestic market. This will further give that kind of push for the domestic companies and for Chinese companies it will become much more difficult for them to come and participate under the EPCG also.(Copy edited by Shweta Mungre, interview transcribed by Binu Panicker)