Govt likely to impose customs duty on power equipment from China

In an attempt to provide level playing field to domestic public sector and private players, the government has ``in principle’’ agreed to impose a 14 per cent customs duty to check import of cheap Chinese power equipment in line with the Arun Maria Committee recommendations.

Domestic players like Bharat Heavy Electricals Limited (BHEL) and L&T have been pressing the Government to check the import of cheap Chinese power equipment to prevent the domestic industry from incurring heavy losses. In fact, the Heavy Industry Ministry has written to the Power Ministry to postpone by a month the bidding for the 4,000 MW Bedabahal ultra mega power project (UMPP) in Orissa and adopt the global competitive bidding route for it. ``We are ready to accept the recommendations of the Arun Maira Committee,’’ Minister for Heavy Industry and Public Enterprises, Praful Patel said here after a high level meeting on the issue.

The Committee, headed by Planning Commission Member, Arun Maira, had suggested that the government levy 14 per cent customs duty on import of Chinese power equipment. The Heavy Industry Ministry is of the view that domestic power equipment manufacturers should be provided with a level-playing field.

It was argued that for local manufacturers there are disadvantages, like sales tax, octroi and the Chinese currency, which is kept artificially low to keep exports lucrative.

The domestic power equipment makers have been demanding a levy of 14 per cent duty on imported equipment, mainly from China, to provide them a cushion against local taxes.

However, Association of Power Producers (APP) has a different view on the issue. APP director general, Ashok Khurana, said Imposing customs duty is likely to have adverse implications for capacity addition programme and financials as it is likely to increase power cost. Companies such as BHEL, which have been lobbying for imposition of duty, argue the impact of import duty imposition on power tariff would be minimal and can be dealt with. Domestic players like L&T, BHEL, Bharat Forge and Thermax are of the view that the government should re-visit the import duty proposal which was put on the backburner last year.