Close on the heels of Prime Minister Manmohan Singh’s visit to China, the Union Cabinet, on Thursday, gave its approval to China for setting up power equipment service centres in India.

According to the memorandum of understanding (MoU), likely to be inked during the visit of Dr. Singh, the Centre would allow entry of Chinese companies in not only setting up power equipment servicing centres but also equipment manufacturing facilities in India, catering to a number of power projects which are in the process of purchasing power equipment from China or already have that equipment.

Several power project developers, including Lanco Infratech, Adani Power, CLP India Pvt. Ltd. and JSW Energy, have placed orders on Chinese firms for equipment. In 2010, Reliance Power and Shanghai Electric Corporation signed a $10-billion deal for sourcing equipment for the Indian company’s projects to be set up in 10 years.

The Heavy Industries and Public Enterprises Minister, Praful Patel, has, time and again, raised the issue, and demanded an additional levy of 5 per cent on imported power equipment.

Mr. Patel has written to Finance Minister P. Chidambaram, seeking higher import duty on power gear, which at present attracts 21 per cent.

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