Excise duty relief a step in the right direction: Thermax

The Finance Minister announced an excise duty exemption for power equipment manufacturers in Budget 2011.

"Capital goods imported for the expansion of existing mega or ultra mega power projects (UMPPs) enjoyed a concessional basic customs duty of 2.5% and full exemption from countervailing duty (CVD). This created a disability for the domestic suppliers who are required to pay Central Excise duty on supplies to such projects," he said. Speaking to CNBC-TV18, MS Unnikrishnan, managing director of Thermax said, the removal of excise duty is a step in the right direction. "This move has brought in a level playing field for the domestic suppliers," he added.  Below is the verbatim transcript of Unnikrishnan's interview with Mitali Mukherjee and Udayan Mukherjee of CNBC-TV18. Also watch the accompanying video. Q: What did you take away from the budget with reference to the fact that there will now be no excise duty on equipment for UMPPs? A: Certainly, it is a positive smaller move in the right direction by the finance minister. We didn't have the level playing in the past because if somebody were to import capital equipment meant for the mega power project it did not have a customs duty or a CVD whereas when the same was bought from an Indian manufacturer they had to pay excise duty. The government has brought in a level playing field. We still have a disadvantage in comparison to China, especially on three counts. First one is the artificial picking of the currency. Second is, our industry is almost 20 years old. They have all the efficiencies and capabilities built in the past 20 years, whereas in India it is a very nascencet and supercritical UMPP industry. Third and the most important is that, the government of China is giving export benefits to the manufacturers of the local country.

These three have to be countered with the import duty for at least four to five years to protect and growth in Indian industry. This is my first takeaway related to excise duty, otherwise, the budget is quite positive. Though there are mixed reactions from various people, I believe, the government is planning to control the fiscal deficit which should have a positive impact from a medium to long term. Second is, they have committed Rs 210,000 crore investment for the infrastructure area. These are very positive moves in the right direction. Q: In terms of comparisons with China, is this a disappointment that there was no customs duty on power equipment imports. Were you expecting that? A: I don