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Korea’s Doosan eyes India unit

India may soon get its first 100 per cent foreign direct investment (FDI) project in the power equipment manufacturing space.

business Updated: Jun 08, 2010 23:02 IST
Anupama Airy

India may soon get its first 100 per cent foreign direct investment (FDI) project in the power equipment manufacturing space.

South Korean major Doosan Heavy Industries and Construction Company is planning to set up a new power equipment manufacturing facility in the country.

Union Power Minister Sushil Kumar Shinde told Hindustan Times that the Doosan chairman would meet him on June 28 to discuss setting up of this facility.

Asked on the nature of ownership of the proposed venture, Shinde said, “The understanding given to me is that Doosan is keen to set up this facility as a 100 per cent FDI.”

All foreign players who have so far announced plans to set up similar facilities in India have taken the joint venture route with local companies. For instance Mitsubishi of Japan has tied up with Larsen and Toubro; Toshiba has formed a JV with the Jindals; Ansaldo of Italy has announced plans with GB Engineering and Alstom of France has tied up with Bharat Forge.

Given India’s capacity addition plans, there is huge market for the supply of power equipment. Even though the country’s leading power equipment manufacturer, BHEL, has increased its capacity manifold, there is still a huge unmet demand that has resulted in lower than anticipated power generation in the country.

India has a power generation capacity of 153,000 MW and intends to add 100,000 MW by 2017. It initially planned to set up an installed capacity of 78,577 MW, but the target has been revised to 62,000 MW. Shortage of equipment is one reasons for the delay in the country’s qambitions expansion plans in power generation.

A senior power ministry official said more and more foreign equipment suppliers are keen to set up shop in India. “There is a proposal to impose a safeguard duty on power equipments import. If this happens imports may not remain a lucrative option for global suppliers who feel India is a big market for them.”