Power ministry opposes duty on Chinese imports.

NEW DELHI: The power ministry has opposed a move for immediate imposition of import barriers, including slapping of upto 14% safeguards duty, on power generation equipment from China to protect domestic manufacturers such as state-run Bhel. Instead, the ministry favours introduction of such measures from April 2012, or the beginning of the 12th Plan, to avoid tripping ongoing projects and raise cost of electricity.

In a letter to cabinet secretary K M Chandrashekhar, power secretary H S Brahma has said the Planning Commission report recommending such measures has wrongly projected agreement of his ministry. Expressing ‘‘serious reservations’’ on the report by Plan panel member Arun Maira, Brahma says the duty barrier should not be imposed before April 2012.

Indian power producers have sourced equipment from China worth Rs 250,000 crore, largely because of the inability of local manufacturers to meet demand. Chinese equipment is cheaper due to state incentives and undervalued currency. Assocham recently said in the last one year, the domestic manufactures have lost supply opportunities aggregating 50,000 mw.

The 2008-09 Economic Survey too had raised concerns over zero-duty import of power generation equipment. In contrast, locally manufactured equipment, even after getting ‘deemed export’ status, attract duties and taxes of nearly 6% whereas Chinese manufacturers get plenty of government incentives.

In case the Maira report is implemented immediately, the ultra-mega power projects and other big plants under construction will see their costs escalating, which will also push up cost of power. It will also effect equipment made by firms such as Shanghai Electric Group, Dongfang Electric and Harbin Power Equipment.

Source : TOI