Govt may hike duties on insulators to help local cos like Aditya Birla Group, BHEL.

NEW DELHI: Chinese companies are threatening the survival of not just power equipment industry in the country, but also manufacturers of insulators for transmission systems who claim that a fifth of their market has already been usurped by subsidised products from across the border.

The commerce department is working on a proposal for imposing higher duties on insulators - currently at a low 7.5% - to give a breather to local players such as the Aditya Birla group and public sector Bhel.

"Representatives of power insulator manufacturing companies have approached us with details of Chinese products taking over the domestic market. We are studying the matter and may recommend higher import duties soon," a commerce department official told ET.

The Indian industry for insulators, a material that resists the flow of electric charge and is used to coat cables and wires, is estimated at over Rs 2,000 crore, but is complaining of idle capacities due to a surge in imports from China.

"Chinese firms enjoy pricing benefit of 22.9% arising from export subsidy, low interest rates and beneficial tax policies. They have captured over 20% share of the Indian market over the past four years," says Murli Venkatraman, MD, WS Industries and past president Indian Electrical and Electronics Manufacturers Association (IEEMA). Imports of insulators from China, which was worth just Rs 18 crore in 2006, crossed Rs 303 crore in 2010.

Public sector transmission companies like Power Grid and state electricity boards have started giving bulk contracts to Chinese companies leading to protests from industry associations which claim that many such companies do not have the necessary experience or qualifications and are using inferior material.

In a letter to the Maharashtra state electricity transmission company on contracts for glass insulators that were given to a Chinese company Yibin, IEEMA pointed out that the company's major business was manufacturing of glass bottles for alcoholic products, and it had started production of insulators only in 2010 and had no experience in India.

"Chinese companies are engaging in predatory pricing with EPC contractors to gain market share in the Indian market and put Indian insulator companies out of business," IEEMA insulator division chairman KS Ramiah said. Similar letters have been sent to many other state boards.

Indian companies were asked by Power Grid and the energy ministry in 2008 to make investments to increase capacities, but now domestic players are suffering as there is no protection from Chinese companies, Venkatraman said.

Source : economictimes.indiatimes.com