The government is likely to announce a 19% duty on imports of electric equipment for all categories of power projects in the forthcoming Budget. The duty structure is likely to be made applicable from April 1.
According to a Cabinet note, a copy of which is available with HT, a 5% customs duty along with a 10% countervailing duty equal to excise duty on domestic industry and a special additional duty of 4% is likely to be levied uniformly on equipments supplies for power projects.
All projects certified as mega power project and provisional mega before the date of Cabinet decision will be exempted from the proposed duty structure and will continue to get the benefits of duty exemption available under the mega power policy, the note states. The list of projects will be submitted to the revenue department by the power ministry once the proposal is cleared by the Cabinet.
At present, projects with less than 1,000 MW of generation capacity attract a 5% import duty while the rest enjoy duty-free import of equipment. The proposed duty will help safeguard the interest of domestic equipment makers such as BHEL and Larsen & Toubro (L&T) against cheap supply of equipment by Chinese manufacturers.
Around 42,000 MW of capacity has already been added in the 11th Plan and 76,000 MW are under construction for benefit in the 12th Plan. Around 59,580 MW (about 48%) of orders out of the total 122,965 MW have been placed with BHEL. Share of orders placed on Chinese manufacturers have been 48,090 MW (about 39%) and 7,960 MW (about 6.5%) on other foreign manufacturers.
{{/usCountry}}Around 42,000 MW of capacity has already been added in the 11th Plan and 76,000 MW are under construction for benefit in the 12th Plan. Around 59,580 MW (about 48%) of orders out of the total 122,965 MW have been placed with BHEL. Share of orders placed on Chinese manufacturers have been 48,090 MW (about 39%) and 7,960 MW (about 6.5%) on other foreign manufacturers.
{{/usCountry}}Besides BHEL, other domestic manufacturers have only 7,335 MW (about 5.6%) share out of 76150 MW of orders placed so far. The proposed duty structure, is followed by most countries globally.