The government's proposal to levy a 19% duty on import of power equipment has upset leading global equipment suppliers, especially US-based conglomerate General Electric’s plans in India, where it finds itself at potentially at a disadvantage amid emerging trade equations.
Although the proposed levy, which is yet to be ratified by the cabinet, should have equally worried other global suppliers such as Alstom, Siemens and Ansaldo — all European firms — it is only GE that has openly voiced its concerns.
GE recently outlined its worries in a letter to India’s ambassador in the US, Nirupama Rao.The president and CEO of GE India, John Flannery, and the president and CEO of GE Energy, Banmali Agarwala, told Hindustan Times in an interview that India’s policies were critical at a time when it had a vital need to boost investments in the power sector.
“Given the strong demand for power, shortages can’t be just allowed to widen,” Flannery said. “There is a clear need to accelerate investment in the power sector. All policies should be implemented keeping this in mind.”
While GE’s top brass reserved comments on why its European competitors in India are not flagging the issue, government officials said the conglomerate’s statements should be seen in the context of a fear that a proposed India-European Union free trade agreement could make European equipment much more competitive in terms of prices and duty free access.
Flannery said the proposed duty would not only reduce competition in technology, but would also raise import costs and adversely affect consumer tariffs in India. Agarwala said the duty on imported equipment was actually recommended to restrict rising imports of Chinese power equipment in the backdrop of quality concerns.” “To encourage and nurture manufacturing, such high duty barriers should not be imposed,” he said.
Asked if GE could set up a facility to locally manufacture power equipment in India —something that could ease import duty costs — Flannery said, “We are open to doing it in India or any other country but only after seeing how it fits into the global platform.”
“Over time, we will surely have an Asian manufacturing capability for sure,” he said.