India May Levy Import Duty On Power Equipments To Deter Chinese Invasion.

Livemint reported that India is reviving a plan to scrap its mega power plant policy, imposing a 5% customs duty on the import of equipment that goes into thermal projects that will generate at least 1,000 MW. The government's move is believed to be prompted by a desire to prevent the import of Chinese equipment.

To be sure, the move needs to be cleared by the cabinet and the rule will apply only to new projects with companies that have already placed orders with Chinese equipment makers being exempt.

A top power ministry official said that "Tariff or custom duty exemption is only applicable for mega power projects. If this distinction is done away with, there is no difference between mega or non mega. The imported equipment will be subjected to a 5% customs duty, 10% countervailing duty and special additional duty of 4%. There will be no distinction. Everyone will have to pay the same duty."

The mega power project status allows fiscal benefits to developers of thermal power plants of at least 1,000 MW capacity, including a tax holiday for 10 years and a waiver from customs duty on equipment imports. Developers of smaller projects pay a 5% import duty on power equipment. The mega status is also available to hydropower projects having a threshold capacity of 500 MW. In Jammu and Kashmir and the North East, the threshold capacities are 700 MW for thermal projects and 350 MW for hydropower.

The power ministry official said that the power ministry is expected to take up the issue with the Union cabinet soon. He added that "Any policy change will have to be prospective."

Power generation equipment manufacturers having a manufacturing base in India like BHEL, Doosan Heavy Industries and Construction Co Limited and the JVs between L&T and Mitsubishi Heavy Industries Ltd, Toshiba Corp of Japan and the JSW Group, Ansaldo Caldaie SpA of Italy and Gammon India Ltd, Alstom SA of France and Bharat Forge Ltd, BGR Energy Systems Ltd and Hitachi Power Europe GmbH, and Thermax Ltd and Babcock and Wilcox Co, will benefit from such a move.

Source : steelguru.com