Imposing 14% import duty to procure power equipment from foreign countries may adversely affect private players and have cascading impact on tariff rates, while the same will work in favour of domestic manufacturers  The Association of Power Producers (APP), a 12-member body comprising major private sector power players have filed a petitioned to Prime Minister Dr Manmohan Singh against the proposed imposition of customs duty on foreign power equipment, citing that such a move will hamper capacity addition programme undertaken by them. Notably, the Planning Commission had suggested the Government of India (GoI) to levy 14% customs duty on the import of power equipment to safeguard the interest of domestic manufacturers and create a level playing field for them while checking the influx of Chinese equipment. The Commission stated that GoI should levy 10% customs duty and 4% special additional duty.Impact on tariff
In this context, Raghvendra Upadhyay, senior vice president at the Independent Power Producers Association of India, while speaking to a Machinist360 correspondent, said, “Customs duty should be levied on a priority basis. Currently, India, especially rural India, suffers from acute shortage of power, which has to be overcome at the earliest. GoI is already lagging behind capacity addition proposed in the current Five Year Plan. Imposition of customs duty on power equipment procured from foreign territories will severely impact tariff rates.”
On the other hand, levy of customs duty will hugely benefit companies such as Bharat Heavy Electricals Limited and Larsen & Tubro. “GoI should consider all aspects before coming to any conclusion as private sector players play a huge role in satisfying the demand for quality power equipment in the country. At the same time, domestic power equipment manufacturers need to be protected against the threat posed by their Chinese counterparts,” comments Abdul Shiekh, managing director of Zar Power Equipment, a mid-sized dealer of power equipment in Mumbai.
Meanwhile, according to the Ministry of Power, import duty should be levied from 12th Five Year Plan keeping in mind capacity addition targets of the ongoing Five Year Plan.
Arup Choudhury |
