Govt not to impose duty on power equipment import

KOLKATA: The government is not going to impose duty on capital goods import of power equipment for mega power projects during the present plan period, a top government official has said.

"The finance ministry has decided not to impose duty on power equipment imports for mega power projects during the current plan period," Revenue Secretary Sunil Mitra told PTI here.

He said that a committee of secretaries had been set up to look into the issue of the difficulty in maintaining duty-free imports of capital goods for mega power projects as Chinese imports were causing injury to the domestic industry.

Mitra said that it had been decided that it would not be proper to impose a duty in the midst of the current plan period as it would disturb the ongoing projects. "Some projects are partly underway and equipment orders had been already made for others. How can we disturb them by imposing a duty now," he said.

The official said that the issue would be re-visited in the 12th Five Year Plan which starts after March 2012. The government move might upset Indian power equipment manufacturers, partly BHEL, which had been insisting on for a level playing field on the face of Chinese onslaught.

Recently, executive director of BHEL Trichy Complex, which manufactures boilers, A V Krishnan said that the company had approached the power ministry for the problems which it was facing due to cheap Chinese imports. He said that Chinese power equipment were 20 per cent cheaper as there was no import duty.

Krishnan said while BHEL was paying all kinds of taxes, zero-duty import was posing a real threat as Chinese companies were taking advantage and penetrating the country power sector as a result of which it lost orders for several projects.

BHEL maintained that it was seeking that some duty be imposed on power equipment imports so that the problem was rectified. Krishnan also said that the company was expecting a positive gesture in the coming budget.