The Prime Minister’s Office (PMO) has asked the Power Ministry to move a Cabinet note on imposing import duty on power equipment to protect players such as BHEL and L&T against cheap imports, especially from China.
The decision was taken at a meeting headed by Principal Secretary to Prime Minister Pulok Chatterjee on Wednesday. The meeting was attended by senior officials from the Power, Finance and Heavy Industries Ministries.
Power Ministry sources said a duty of around 14-19 per cent was likely to be suggested in the Cabinet note, which was likely to be moved shortly. The government had raised the excise duty by 2 per cent to 12 per cent in the latest budget.
At present, equipment imported for projects less than 1,000 MW capacity attract 5 per cent customs duty while those above that are exempt. There has been a demand from domestic players to provide a level-playing field and protect the industry from cheap imports, especially from China. Last month, the Cabinet had deferred the proposal to raise the duty on imported power gear.
Meanwhile, Association of Power Producers’ Director-General Ashok Khurana opposed the imposition of import duty on power equipment, asserting that any such move at this stage would have an adverse impact on the capacity addition programme during the XII Plan.
“We, at APP, urge the government once again to keep the decision on customs duty on imported power equipment in abeyance so that the power sector does not get exposed to further vitiating factors,’’ he added.