Hydro projects may get Customs duty waiver
With the government turning its attention to hydro power as a source of clean and cheap power, it is now considering measures to bring down the cost of setting up hydro power projects.
By Urmi A Goswami, TNN |
NEW DELHI: With the government turning its attention to hydro power as a source of clean and cheap power, it is now considering measures to bring down the cost of setting up hydro power projects.
The government is considering a customs duty waiver on construction equipment as well as cement and steel used. While the proposed 100% customs duty exemption for construction equipment is geared specifically for hydro projects, the concessional customs duty on cement and steel used in setting up or expansion of projects is fuel neutral.
For a hydro project, duty waivers for equipment cement and steel could mean a reduction of anywhere up to 10% reduction in costs. At a rate of Rs 5 crore per MW, a 10% duty waiver could mean a susbstantial reduction in costs.
The government is, therefore, considering a customs duty exemption on import of construction equipment like tunnel burrowing machines, cable cranes, concrete pumps and heavy earth-moving equipment for hydro power projects.
This proposal is in line with the exemption for equipment used in National Highways Authority of India (NHAI) road projects. It is also considering concessional customs duty on cement and steel, both of which make for the bulk of the civil works cost of a hydro project.
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In turn, civil work is biggest expenditure component of a hydro power project. The government is thinking of classifying both cement and steel used in power projects under Chapter 98.01 of the First Schedule of the Customs Tariff Act. At present, only machinery, equipment, and raw material for manufacture of machinery or equipment are classified under this schedule.urmi.goswami@timesgroup.com
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