General Electric, the $147-billion US multinational, has opposed the government’s plan to impose duty on power equipment imports, stating this would jeopardise its prospects in India vis-a-vis other European companies.
In a letter to Nirupama Rao, India’s ambassador to the US, the company’s vice president and senior counsel, global government affairs and policy, Karan Bhatia, said that the 14 per cent import duty recommended by the Arun Maira committee would result in a 20 per cent increase in the cost of imported equipment. The committee had recommended a 14 per cent duty structure to incentivise domestic manufacturing and also to restrict rising imports of Chinese power equipment.
According to officials in the department of commerce, GE is not a major supplier of equipment for coal-powered thermal power plants. It produces gas turbines in partnership with BHEL through a licence and a joint venture and also produces super-critical steam turbines. Its bigger fear is the proposed India-European Union free trade agreement that will render European equipment much more competitive in terms of prices, the officials said. In fact, GE’s Bhatia wrote as much in his November 30, 2011, letter to Rao. “The EU majors would be particularly well positioned on this increased duty with the impending completion of the EU-India FTA, putting US manufacturers at an even greater disadvantage,” he said. Several Indian firms have joint venture with European companies such as Gammon-Ansaldo, Bharat Forge-Alstom, Thermax-Babcock and BHEL-Siemens.
The higher duty, GE has argued, would impose additional costs on Indian consumers, adversely affect its ability to service gas-based power generation needs and advantage European competitors who will obtain duty-free access under the proposed FTA.
The commerce department and department of heavy industries officials, however, said that Indian companies cumulatively have a capacity to produce equipment to generate 35,000 mega watt power. “No longer do we need to depend on imports. Moreover, the domestic industry is at a disadvantage since it has to pay local duties, whereas equipment for mega projects (over 1,000 mw) can be imported without any duty,” said a department of heavy industries official. State-owned power equipment BHEL too has ramped up capacity to 15,000 mega watt and plans to raise it further to 20,000 mw.
GE has argued that India can consider non-tariff approaches like asking foreign suppliers to meet technical standards issued by the Central Electricity Authority. This has already been done after quality-related issues cropped up at a power plant in Haryana. It can also explore other tools and remedies that are WTO compatible, it said.
Uneven deal
Firm says 14% import duty recommended by the Arun Maira committee would result in a 20 per cent increase in the cost of imported equipment
Its bigger fear is the proposed India-EU FTA that will render European equipment much more competitive, say department of commerce officials.
Source : indianexpress.com