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Duty benefits on power equipment imports to go

business Updated: Aug 01, 2010 23:26 IST
Anupama Airy
Anupama Airy
Hindustan Times
duty benefits

Special duty benefits on the import of equipment for mega- and ultra-mega power projects are all set to go as the government tries to check the surge in imports of cheap power equipment, especially from China.

Instead, a uniform duty structure has been proposed for all categories of power projects.

Proposed regime

A customs duty of 5 per cent

A countervailing duty of 10 per cent (equal to excise duty on domestic industry for level playing field)

A special additional duty (SAD) of 4 per cent

To avoid disruption in the ongoing capacity addition programmes, the government plans a suitable clause to provide exemption from import duty

Mega power projects are those with a capacity of 1,000 MW or more while ultra-mega power projects have a capacity of 4000 MW or more.

The move will not only protect the interests of the existing domestic power equipment manufacturers, such as BHEL and L&T, but also encourage all new domestic and foreign firms planning to manufacture power equipment in India.

Companies such as Toshiba, Jindal's JSW, South Korea's Doosan Heavy Industries, Italy's Ansaldo, Alstom and Bharat Forge are planning to set up power equipment manufacturing facilities in India.

Senior power ministry officials told Hindustan Times that the committee of secretaries (CoS) in its July 12 meeting had decided against levying any "country-specific" safeguard duty, as sought by the industry.

"The CoS has instead proposed to do away with the import duty concessions that are presently available for equipment imports for mega and ultra-mega power projects," an official said.

"A uniform duty structure has been proposed for all imported power equipment — be it for non-mega, mega or ultra-mega power projects."

However, to see that this proposal does not derail the ongoing power capacity addition during the 11th plan (where orders have already been placed with countries like China and others), it is proposed to fix a cut-off date to segregate projects for application of these duties.

"The CoS has proposed July 31, 2010 as the cut off date."