The government is planning sops to safeguard the interests of the domestic power equipment industry against cheap Chinese imports.
Government officials said the prime minister’s office (PMO) has convened a meeting of the ministries of finance, heavy industries and power on Tuesday to discuss the recommendations in this regard made by a committee of experts under Planning Commission member Arun Maira.
A senior power ministry official confirmed the meeting had been scheduled, and said cabinet secretary KM Chandrasekhar would chair it.
Domestic equipment manufacturers led by L&T and BHEL have voiced concerns about the advantages Chinese equipment suppliers have over them. “There is a clear 14 per cent advantage that the Chinese suppliers have over domestic manufacturers,” said a senior L&T official requesting anonymity.
“Chinese companies also fare better price-wise due to a grossly undervalued Chinese Yuan,” a BHEL official said.
However, a power ministry official said any protection measures should not be implemented before April 2012, as it could hurt the ongoing capacity addition programme.
“All those projects that have ordered Chinese equipment face the risk of getting de-railed if the proposed sops are announced at this stage.”
The Planning Commission panel report, however, disagrees with this view of the power ministry, and has recommended options and modalities to address the disadvantages faced by the domestic industry in the power sector.
“The domestic manufacturers have built up sufficient capacities to supply power equipment, which are adequate to meet the projected demand even if discounted at 60 per cent of projected capacity of these manufacturers,” the report said.
“In case measures to level the playing field for domestic manufacturers for power equipment are not immediately notified, not only would the disadvantages faced by domestic manufacturers be perpetuated, but development of domestic manufacturing capacities would be seriously impeded, and indeed new investors may withdraw further investments,” the report said.
One of the panel’s final recommendations is that the extent of disadvantage that needs to be bridged is about 14 per cent and this should be for mega power projects as well as ultra mega power projects.
This, the report recommends, can be achieved by the levy of a 10 per cent customs duty and a special additional duty of 4 per cent.